Mortgages at 0%. More FOMO. Is this stuff possible?
The die may have been cast at the end of the week. We shed 24,000 jobs in July. Unemployment hit 5.7% (the States is 3.7%). Fewer people have been working in each of three of the last five months. Last week a 30-year Canada bond hit the lowest yield… ever.
While the Fed trimmed its key rate recently, our guys did not. It now appears American rates will go down again on September 18th and October 30th, leaving the Bank of Canada with one of the highest levels in the western world. So, Mr. Bond Market says, the odds are rising for a chop here. Maybe on September 4th. For sure at the end of October.
This is a problem for Ottawa, where a federal election’s slated for ten days before Hallowe’en. Already mortgage rates have been plunging, pushed down by competition among hungry lenders and encouraged by a collapse in bond yields (as prices rise). Five-year money is available in the 2% range. Ten-year money is just under 3%. There are even 1.99% mortgages available from some crazy CUs. Meanwhile inflation is 2% – which means: (a) mortgage money is almost free and (b) the central bank rate of 1.75% is already negative.
Why is the cost of money plopping? Some of the reasons…
- The Trumpian trade war with China has sent a lot of investors scurrying into the safety of bonds, where (if held to maturity) you always get your money back. US Treasuries were at near-record lows last week as the White House prepped fresh tariffs and Beijing let its currency slide.
- Inflation is kaput. Despite ten years of economic recovery, this key gauge of growth continues to flop. Without inflation institutional investors (they buy most of the bonds) don’t ask for a premium. They’re just happy to preserve capital. Rates tumble.
- Risk – bonds have less of it than growth assets like stocks. With equity markets near record highs and volatility (thanks to Trump) mounting, bonds have attracted huge amounts of money – pushing prices higher and yields lower.
- An aging population globally (including here) means more savers and bond buyers. That increases the demand for fixed-income assets and drops yields. The demographic makeup of the western world suggests this will continue.
- Interest is the cost of money, which is influenced by supply and demand. The world is awash in debt at the moment, with the US adding $1 trillion this year alone. That’s all financed with bonds. More supply, lower cost. The world now has $13 trillion in bonds with negative yields. The bondholders are paying a small price, in other words, for security.
- The US dollar has been on a tear for a long time. Foreign investors are happy to buy American government bonds even when they pay almost nothing because it gives them a currency hedge. And Trump is actively pushing rates lower, exerting relentless pressure on the Fed to chop, since this will add stimulus to the economy and help him (he hopes) win in 2020.
Conclusion: the Bank of Canada has nobly resisted reducing the cost of money. But this is destined to fail. Down she goes.
A key question: what’ll this do to real estate? What happens if mortgages hit 1%? (A Danish bank went to 0.5% last week on some terms and negative on others – but still added on fees.)
Well, cheap money has a history of goosing house prices in this country. Now a rockstar bank economist suggests that may happen again. BMO’s Doug Porter says Ottawa will have to toughen up its stress test and add other hardass measures in order to keep the rabble from gorging on cheap home loans and rushing headlong into inflated properties, as rates dribble lower. The cost of money, he suggests, “will remain low for long – or forever.”
Porter also worries about population growth, more real estate demand as investors leave stock markers, low vacancy rates, increased speculation and Airbnb madness. “Taking these trends together,” he says, “it seems that the risks are heavily tilted to upward, not downward, pressure on prices over the medium term. In this landscape, domestic policymakers may need to consider other ways to control speculation – especially from abroad – in a world where interest rates stay below inflation, or even below zero.”
Of course, it’s not all about rates. Remember that Canada just lost a mess of jobs, and an economic slowdown may be in the cards. Meanwhile our No. 1 export, oil, has been mired in the $50 range (it was twice that not so long ago) and China apparently hates us. So economic uncertainty could temper the realty fire smouldering within Millennial loins.
Meanwhile plunging rates will pretty much crush GICs and your high-interest savings account. Money for nothing. What a world.
105 comments ↓
The official inflation numbers have been garbage for a long time. Anyone going into the local Starbucks can see that. In a retail business I have a share in, wholesale price increases were running around 5%, now with the Trump Tariffs some suppliers have notified me of a 10% increase.
No argument, awash in debt and awash in bond investors
‘Interest is the cost of money, which is influenced by supply and demand. The world is awash in debt at the moment, with the US adding $1 trillion this year alone. That’s all financed with bonds. More supply, lower cost. The world now has $13 trillion in bonds with negative yields. The bondholders are paying a small price, in other words, for security.”
***************
I hope we agree that the equation here is more supply of bond investors (not debt borrowers) pushes interest rates down.
The demand for more debt by governments would normally push interest rates up, except that the supply of bond investors has grown even faster it seems.
Despite all the debt borrowing by governments it appears that the supply of bond investors willing to lend (for all the reasons Garth notes) at low rates swamps the demand for borrowing.
So, the world is apparently even more awash in (institutional) bond savings than in debt it would seem.
The other argument is that interest rates are not set by supply and demand for lending / saving but rather by central bank manipulation and money printing. That is certainly part of it. But willingness of institutions to invest in bonds at low rates must also be a big factor in the low rates.
Inflation is kaput?
The funniest thing I have ever read.
M2 increased by 5 % + yearly in the last 15 years.
Inflation of necessities is north of 6-8 %.
Community housing, 1750 for a room:
https://ca.finance.yahoo.com/news/coliving-has-arrived-in-canada-amid-an-affordability-crunch-181355041.html
An aging population globally (including here) means more savers and bond buyers>
Hum,
https://tradingeconomics.com/canada/personal-savings
Personal savings went from 15 % in the 90-es to zero!
Tons of baby boomer millionaires willing to buy bonds at 1.3 % for 5-years paper… sure…
Interest is the cost of money
True, but are current currencies money when interest is determined based on non-market conditions?
And whose money is it: yours or central bankers money?
The US dollar has been on a tear for a long time. Foreign investors are happy to buy American government bonds even when they pay almost nothing because it gives them a currency hedge
This is why the Fed will launch Q4 this year as there is tons of people lining up to buy treasuries.
As per J P Morgan Chase:
https://www.zerohedge.com/news/2019-08-10/jpmorgan-fed-will-need-restart-qe-soon
“Conclusion: the Bank of Canada has nobly resisted reducing the cost of money. But this is destined to fail. Down she goes.”
-Ha ha ha ha ha.
Hilarious. These guys are looking like the joke we knew they were all along.
Everyone and their brother could see the obvious, and kept saying that rates should have risen to provide us for a cusion when (not if) the next recession/slowdown hit.
And here we thought they would do the “smart” thing and normalize rates, with a slow relentless, rise in interest rates. Nope. Too dumb to do the right thing.
Now these retard central bankers have to reduce already reduced rates into a hailstorm of debt.
They seem short sighted and easily swayed by some politician….and wholly out of options.
Any criticism is well warranted. Most conspiracy theories are now bolstered. Gold bugs (who are basically just doomsayers and paranoid skizos) have been redeemed.
What a joke.
MF
“Conclusion: the Bank of Canada has nobly resisted reducing the cost of money. But this is destined to fail. Down she goes.”
-How much more indebted can an already indebted population become…I heard Garth say a few days ago.
The answer is much more. There is clearly no one competetent at the helm here.
We already knew we were stupid to not buy RE in the GTA ten years ago. No surprises. But at least there was a glimmer of hope that “normalcy” would be returned by our stewards of money supply.
That glimmer of hope is now gone.
Ladies and gents. GTA RE to the moon.
MF
Hey Garth, what’s with the pic of you and Dorothy? You don’t seem to be your happy-go-lucky self.
Upset tummy maybe?
That’s me smiling. – Garth
Why does an institution accept negative rates?
It is understandable on short-term deposits. The alternative of holding $50 million or whatever in cash in the office safe is not too feasible.
Much harder (at least for me) to understand on a long bond though. But Garth went over the reasons there.
Will we see $ 5 million houses in GTA in our lifetime?
Absolutely. It is a given. Destruction of currency in real time. But no wage inflation whatsoever. Taxes of course will rise.
And hey, don’t wait, load on bonds with 1.3 %, soon to be under 1 % for 5 years paper, as there is deflation…. sure.
And surely gold will tank so expect a house in GTA to fetch 1 ton of gold. Pretty soon.
If the Manipulation of Currencies, and other Impacts on the Supply of Money continue, then what will happen to the Equity market… If business is so stalled Globally, then maybe the Idea of Changing the basic logic of the time value of Money, started by Greenspan, is evident, that the strategy adopted by Central Bankers, is no longer effective, and is in fact exacerbating the problem. The BOC is quietly purchasing Bonds, to create money, and this will not end well… I believe the Central Bankers of the Developed Countries, have to reset the Overnight rates, to about 4 %. Unilatterally, and in tandem.
My concern, is if and when Negative Retail Deposit rates, are suggested and implemented, then the true nature of Fractional Banking will be tested, and a Contagion, can occur… It is so counter intuitive to allow Banks to charge Credit card rates close to 20% …..but only to turn around, and offer almost zero income to Depositors… So our Leaders, … Oh Oh, those same incumbent leaders, we have now… have to come up with a plan, for a lot of problems, or head to another Parade, and let the next guy deal with that one…. It also appears evident that these reverse logic strategies can negatively impact Stock markets, if our trend is similar to Japan`s in the late 90s
Been saying it for years. As low as possible for as long as possible. This is the new normal. We will never see “historical norm” interest rates again.
#4 MF on 08.11.19 at 1:05 pm
Paranoia is a life saving quality when you are governed by /including monetary policies/ idiots.
As for the gold bugs: we have seen nothing yet.
When gold increases 3 times, gold stocks 8-10 times from here, then we will have a conversation.
Impossible? Conspiracy theory? We shall see.
As for GTA, prices surely can go up, no question about it. The question is what salary will you earn there, what quality of life will you enjoy in return.
GTA was the place with worse traffic in north america excluding Mexico City 10 years ago.
Weather ‘is great’, 5 years with record cold weather, more to come.
Will there be idiots willing to compromise/jump on board?
Sure. But will they be wealthy?
I highly doubt it.
Note that everything I have ever said is slowly becoming a reality.
It will be spectacularly damaging for the young generations (no jobs, capped salaries, sky rocketing cost of living and taxes) this is why people with kids, means and brains are quickly leaving the sinking ship.
Godspeed to the rest.
Manias are often based on a false assumption that everybody believes. In the US in 2007 it was, “real estate prices cannot go down.” Currently it’s “interest rates cannot go up.”
Who anywhere in the world is forecasting a global bond bear market? We’re all on the same side of the boat!
Can somebody please explain why tariffs of 10% on $500 billion of goods is enough to crush the global economy? Isn’t this essentially a tax of $50 billion, which is just noise in the era of trillion dollar deficits. $50 billion is tiny for the U.S. and shouldn’t matter in the global marketplace. And the fact that China isn’t buying agriculture from the U.S. doesn’t make that demand go away. Doesn’t the U.S. just sell to somebody else and another country supplies China? Not sure if I’m missing something in this picture?
@#4 MF on 08.11.19 at 1:05 pm
You got that wrong there is a lots of room to go, remember we have negative number, imaginery numbers, complex numbers, and they all works under same rules …
I am surprised that they leept increasing rate
10y greace bond 2%
10y us Treasury 1.75%
10y German bond 0.6%
One country have economy other one doesn’t, and “risk” speed is only 25bases points… But on another hand I am just an electrician.
Jobs still historically low unemployment rates.
The problem isn’t interest rates.
The problem in Canada is the high cost of RE where the jobs are. People simply cannot afford Boomer price tags.
RE prices in job rich cities will come tumbling down. This takes 10 years or so to play out…they are only 2 maybe 3 years into the process.
Eventually, Banks and other Lenders will be underwater + other RE debt securitization like HELOC etc. Massive $ amounts vs. past RE corrections, worse now.
2007. Same dung, different pile. What speeds this up is an external economic shock (e.g., Trump vs. China).
THAT is and will be the problem, not interest rates or 1 months worth of job losses and pray for no external economic shocks.
Frankly, I’m surprised we have come this far without a recession. My guess is those with much to lose are trying to get out before the truth comes out + election on…recall The Big Short.
#1 AGuyInVancouver on 08.11.19 at 12:40 pm
The official inflation numbers have been garbage for a long time. Anyone going into the local Starbucks can see that.
*************************
Well, that’s just silly.
Of course, really dumb name-brand luxury stuff goes up a lot.
Beats by Dre headphones which are nowhere near being the best sounding headphones are $200, that doesn’t mean you have to buy that garbage.
Starbucks coffee isn’t the best coffee, and it most certainly isn’t 2x or 10x better than the alternatives that are 50-90% cheaper.
A new iphone which does not have the best features available for phones costs more than the phones that do have the best features.
The same probably goes for a pair of jeans- inflation on whatever the coolest name brand is might be 20%, but such purchases are idiotic and shouldn’t count if you can buy the same pair of levis you’ve always bought at 2% inflation.
You can’t be a stupid consumer and complain about prices.
#16 SoggyShorts
THAT was good.
It’s all about image. To some worth it at any price no matter how bad the product or consumable.
To the young, as told to me when I taught them, it was all about showing “bling, bling” to attract a “superior” mate.
Frivolous, sad, moral fiber adulteration with no redeeming virtue save preening cultural superiority.
Remember this?
https://business.financialpost.com/news/economy/newsalert-economy-adds-a-record-106500-jobs-in-april-unemployment-rate-dips
I remember posting that I thought maybe they had placed the decimal in the wrong place as this would have been equivalent to a million jobs in the USA. Now I am certain it was.
#16 Soggy Shorts
#1 AGuyInVancouver
“You can’t be a stupid consumer and complain about prices”
Precisely. Easy credit has created lifestyle inflation. Unfortunately, if the only buyers were people who could truly afford to purchase the houses, cars, phones, and vacations that are now considered necessities, the economy would shrink dramatically.
Two days ago you said real estate is done…be patient
I said a reset. Be patient. Two days, sheesh. – Garth
@#11 SB
I just sold my Mississauga house and left the GTA for good. The neighborhood was nice 20 years ago but is now a dump. People can’t drive. They ignored the stop sign near my old house and just drove right thru it in a school zone. They drive around like insane people with entitlement honking and yelling. Exhausting just to get to the mall a few kilometers away. The traffic and noise has probably more than quadrupled in 20 years. I am now happily living in Cambridge in a house almost half the price of my Mississauga house. No mortgage a backyard with a pool and it feels like a resort. So quiet I can hear the birds sing and barely hear a car drive by. People don’t honk or yell. It is a really lovely place. I have Been following Garth’s advice on investing and It has worked out really well for us. THANK YOU GARTH! The KWC area is becoming a tech hub and I see the potential for a lot of growth. It is ideal for young families starting out or down sizing retirees. Or even for Midlife crisis families with teenagers like us. We are now in the University central as well for our kids with lots of choice of schools to attend. Housing is affordable 3 bedroom family homes in the 500,000. Insurance rates are almost 50% cheaper than the GTA. Just saying… If you need employment in the hospital, education, insurance or tech industry it is all here!
PS: Everyone here loves Dogs!
I love the dog photo. Border Collies are so smart.
I also like the other photo of G & D. D has expressive eyes that say love, honesty, compassion, loyalty, and especially humanity.
Doug Porter is way smarter than Benny T at CIBC. He may be right. Funny thing, though. I have this feeling something else may be headed our way that hasn’t hit the radar yet. Like globalization going into a tailspin. Honey Crisp Apples cost $11.00 per kilogram at the grocery store today. So three will cost almost $7.00. They grow apples on the other side of the mountains here in western Canada. I bought some pretty good peaches last week from B.C., though it pained me to support the economy of such a morally bankrupt province. The Jag still wonders about peak oil and how the world will be run if it just becomes to expensive to ship all those containers of stuff over here. Or if people just decide they like the idea of a hundred mile diet, and being more self supporting. Less is more, if you follow. The brainwashed will never understand this, of course.
#4 MF on 08.11.19 at 1:05 pm
Gold bugs (who are basically just doomsayers and paranoid skizos) have been redeemed.
—————
Excuse me but we as a collective would like the more progressive term of “bullion lickers” to be used when addressing us.
Garth, are you going into retirement if gold goes past $1850? I remember you calling the gold peak a few years back and making that statement.
Let me get this straight:
1. The global economy is in a recession #2020
2. Trade wars #POTUS #China
3. Interest rates are being cut #End the Fed
4. Yet # DRAMA_QUEEN
5. House prices, rents and AirBnBs will skyrocket?
#Huh?
#Where will they get the money?
#End the Fed!
# Global capital conspiracy?
If there are no jobs, who will afford the higher rents and real estate prices?!
#Billie Eilish rocks!
#Gen Z
#Born 2001
#Millenials are old farts!
Ok, so for potential or active conflicts, we have China/USA, Brexit, Hong Kong/China, India/Kashmir/Pakistan, Iran and almost everyone, and the hardly mentioned Japan/South Korea trade row (potentially huge, this). I’m sure I’m forgetting a few.
In addition, we saw two Russian military accidents releasing small radioactive clouds in that past two weeks (nothing to see here), and the US pulled out of a nuclear arms treaty as Russia wasn’t adhering to it anyway.
We are likely on the brink of a currency war, the global economy is the shyter or will be soon, and gold is climbing. Central banksters are running out of tools.
In light of all this, does anyone remember that one of the first things Trump did when he came to office was to move very quickly to protect and secure US aluminum and steel industries.
For me, that was a telling moment because no nation can defend itself or project force over a long period of time without extremely robust steel and aluminum manufacturing backed up by an unfettered supply of crude oil (the US is once again the world’s largest producer, as we know).
All of this, then, would I think means ‘risk off’ for the average investor but possibly ‘risk on’ for the average human hoping to live an averagely long life.
Sound advice might be to invest in any and all military stocks, as well as any companies producing iodine pills, MRE rations, first aid supplies and water purification kits. At least, the paranoid investor/human in me thinks so.
When I give in to those dark thoughts and imagine my entire portfolio being reduced to let’s say ash (in the purchasing power sense, at least) there is one comforting thought that lets me shrug this off: I got a house, a yard, a place to grow veggies, raise chickens, shoot zombies should they wander by and burn wood to stay warm in winter.
And I think to myself…what a wonderful decision to make a house a key part of my balanced and diversified portfolio all those years ago.
Fun fact: my house was built the year the last Great War ended and it’s still here.
Well that’s an honest, well presented analysis. And what have you done? Lazy managers hold lots of stocks and make believe bonds (short duration and heavy on corporates). But it’s made good returns this year, so far. What now? Ready for NIRP. Not yet, OK, you have a little time. Like you discovered exposing yourself to US currency. Those preferred were not so tasty. I hate these metaphors. I’m only keeping up, but with less risk. But I am respectful.
Money for nothing. What a world.
—————————————————-
“Money for nothing and the chicks are free.”
It looks like Dire Straits had great foresight…at least about the money.
If voting made any difference they wouldn’t let us do it. – Mark Twain
Garth – How long do you have to physically reside in your principle residence before you can sell (flip) it with no capital gains taxes?
There is no set period of time. CRA looks at the circumstances to decide if profits are business income, taxable capital gains or tax exempt. – Garth
Only reason central banks would be cutting this aggressively is because they know the house of cards is about to implode.
Fed has cut once. BoC zero. This is aggressive? – Garth
When central banks keep dropping interest rates precious metals and other forms of assets will rock.
It is a testament to how bad things really are.
Gold is an insurance policy my father always said. Culturally it has been a store of wealth in my culture for a very long time.
No I’m not a gold bug. It’s a door stop most of the time.
My comments are not really about preciosu metals they are about the trouble most large organizations are in because they pigged out on cheap money that the economists told them was a steal.
Well as we know from history, its not until the tide goes out where we see who is swimming naked.
Govts at 6% interest rates will fold and revenue will need to be increased causing taxpayers and businesses to bear an unbearable burden becuase they too are underwater at 6%
Thus the only way to clear this debt is go negative. Inflation used to work for these debtors but no more.
The great experiment with zero bound had destroyed the inner workings of our economies.
Look at the govts around you, Trudeau tacked on 100 billion in long term in 3.5 years??
Provincial govts have debt loads totally over 1 trillion in Canada.
Pensions are B, they are buying anything for return.
It is sad take on a great system that is finally calving.
50 buck an hour nurses, teachers, etc in the public sector have made budgets explode.
The public sector has feasted on the higher property tax revenue and the taxes, fees, charges etc. They have built their financial models for the next 5 years on gushing tax revenue which is drying up
That game is coming to an end and god knows the outcome of that.
Denamrk is now offering negative mortgages. Yup your 100K mortgage will go down without a nickel in premium….
Frightening?
U bet
Your majesty, you are a drama queen. – Garth
Re: #12 greyhound on 08.11.19 at 2:11 pm
Interest rates and the value of the U.S. dollar will both push upward from the start of May 2020 to the end of September 2020… if Trump isn’t impeached or steps down first. I’m betting my own money that long term bonds and gold will be big money losers during that time-span.
BC Real Estate has stabilized but truly dead in the water after record price gains.
Canada had its first back-to-back decline in jobs in nearly 5 years. Not just that, but private sector jobs plunged 69.3k, the steepest slide since Jan 2009, at the depths of the Great Recession’s despair.
This is playing out faster than I expected. Job loss will be the next leg down in real estate with panic selling, a bottoming then stagnation until the next economic boom that will see house prices start recovering around 23/24.
So, deals are coming along with cheap money. It has been 11 years. Cash to buy into everything will be king in the coming quarters (around mid 2020) and game over for those living on credit.
If inflation/cost of money is strongly influenced by an aging population (vide Japan) then we can expect very low interest rates for the next 20+ years (also vide Japan). Maybe much longer – when do Millennials start turning 65? The last Boomers will barely be in the plot when the Mills start hitting the golden years.
As for housing continuing to go up – well, perhaps. But one must believe that even at rock bottom rates for possible multiple decades there is a limited supply of folks who can afford to shell out million plus dollars for a place to live. With governments hungry for tax revenues & an apparent will to tax the bejeesus out of property owners (because, like, they are RICH) how long before people start abandoning properties (also vide Japan)? If you can’t sell it, can’t afford the tax hit & can’t maintain it, walking away might be the only option left.
So if we get to zero or close to it interest rates then what happens if the economy doesn’t respond? Then there are no more rabbits to pull out of the hat. We go negative? Then what? The logical conclusion to all of this doesn’t look too promising to me.
22 jag – have you read this book?
https://www.amazon.ca/Your-World-About-Whole-Smaller/dp/030735752X
I got it years back. Read it once. IIRC, Rubin’s premise
was entirely based on peak oil, which was going to
repeatedly trigger recessions when demand outpaced
production. Seemed like a good call when oil hit $140.
Of course as this hasn’t happened since it doesn’t seem
like such an issue anymore.
#10 Yukon Elvis on 08.11.19 at 1:38 pm
Been saying it for years. As low as possible for as long as possible. This is the new normal. We will never see “historical norm” interest rates again.
————————————
Look up “Paradigm Shift” by Ray Dalio. Many “new normals” turned out not to be.
Re: #13 Feds on 08.11.19 at 3:31 pm
Trump just did that because he didn’t get his half point rate cut from Powell.
@#19 Sold Out
“Unfortunately, if the only buyers were people who could truly afford to purchase the houses, cars, phones, and vacations that are now considered necessities, the economy would shrink dramatically….”
++++
True.
And when the greaterfools stop buying all the toys.
Its called a Recession.
Interesting note in The Economist( July 20 Page 47);
Months before the drop in British housing sales 10+ years ago.
Dulux Paints noticed…
Paint sales for house interiors and exteriors were dropping.
The drop in paint sales soon spread to other renovation “necessities”…..
Mr. Fartz says….keep an eye on the local Paint Store as the canary in the coal mine……..Or the coming Economic Apocalypse ( and a one and a two and a Apocalypto2019!)
A bear market that lasts a decade?
Financial Times: Braced for the global downturn.
https://www.ft.com/content/70f043c2-b9f3-11e9-8a88-aa6628ac896c
Fear sells. Don’t fall for it. – Garth
I stated here last week, interest rates in the US dropped because:
1) The US being the global reserve currency is NOT lowering rates for domestic reasons, rather, because many countries are in deep fiscal trouble if rates increase. As the global reserve currency, increasing rates would decimate currencies around the world
2) Dropping rates kicks the proverbial can down the road, however, at some point, rates will need to increased to quell inflation.
3) There will be a mad rush into US equities once people realize the gig is up. It’s why the US markets bounced last January. Expect a repeat of last year, with a hard drop in markets into the New Year.
What a world
https://www.zerohedge.com/news/2019-08-11/misanthropic-bankers-behind-green-new-deal
https://www.zerohedge.com/news/2019-08-10/denmarks-3rd-largest-bank-now-paying-people-take-out-mortgage
https://www.zerohedge.com/news/2019-08-11/everything-has-changed-gold-all-time-high-73-countries
#8 Stan Brooks on 08.11.19 at 1:20 pm
Will we see $ 5 million houses in GTA in our lifetime?
Absolutely. It is a given. Destruction of currency in real time. But no wage inflation whatsoever. Taxes of course will rise.
And hey, don’t wait, load on bonds with 1.3 %, soon to be under 1 % for 5 years paper, as there is deflation…. sure.
And surely gold will tank so expect a house in GTA to fetch 1 ton of gold. Pretty soon.
——————
Highly unlikely. Look at gold on the daily chart… it just broke out of the 8 year downtrend. All upside for gold from here, especially since the fed is cutting rates, ending QT and inevitably launching QE4.. not to mention Russia and China buying go hand over fist while dumping their US treasuries.
RE priced in gold will plummet from here on out for the forseeable future.
You are both delusional. Get a room. – Garth
@#36 Vampire studies (doctoral thesis) on 08.11.19 at 8:01 pm
Yes, I remember that book. Written by the guy who used to have Benny Tal’s job. An economics guy, not an oil guy.
Give this a listen. Interview with Art Berman. A guy who knows what he is talking about. From January 2018, but still very relevant.
https://kunstler.com/podcast/kunstlercast-299-happened-peak-oil-chat-art-berman/
Friend of mine posted picture of him with Master Ken and “other dude” on FB, than I remembered this.
https://youtu.be/xLSzC0gZZy0
If you didn’t see jw3 it’s ok this is much better and shorter.
The gold bugs are going nuts right now. Lots of articles in the Globe urging folks to go to cash or gold. Look at the gold ETFs (jnug).
My pick would be beaten down stock of companies that produce military equipment. Particularly Boeing. There will soon be wars. Anyone with the ability to manufacture arms is going to clean up.
Low interest rates just mean no one will ever be able to own a house.
You will spend your entire life with a mortgage. You will pass it down to your kids. 1% financing means that someone who earns 100k per year can purchase and make payments on a house costing one million dollars.
Makes you wonder if there is anything left of the kernel. That little seed of truth that holds up this entire flimsy enterprise.
Beaten and bruised. Torn so thin it could be whisked away by a breeze.
And yet still holding this big broken and corrupt situation together.
What happens when it blows away?
New money policy? Or something else?
Inflation is related to broad money supply. It is decoupled from the vast supply of credit. Central banks seemed to have confused money and credit. The inflation is obvious, the price of housing bears no relationship with the market and are driven by cheap credit.
When we hit the bottom of the cycle we will see where the inflation has been hiding. It will be those assets that auger in. Think dot com bubble.
The real problem is going to be that the banks are out of bullets and will fail massively like they should have in 2006 to 2008.
I treated myself to an expresso today at our local corner coffee shop, not a franchise but a local shop where all of us neighbors support it. Cost me $3.75 for one good sip of that great bean. Ouch! People are broke, I have seen more business’s close in my local mall in the past 8 months then I have in the past ten years; meanwhile a dollarama just opened up where an optometrist and beside it a shoe store were operating; converted the two spaces into one; my dental office are now closed from Friday to Sunday which was unheard of just a couple of years ago. Travel agency, flower shop, corner store all gone in the past two months. Signs of the times. Scary Sh*t happening out there!!
How likely is it that we see quantitative easing again in either Canada or the United States?
Both economies are growing. Low unemployment. No recession looming. Why would there be QE? – Garth
What a world – chapter two
Results of the New York City medical examiner’s autopsy of Jeffrey Epstein have been released… kinda… saying its determination is “pending further information at this time.”
Both economies are growing. Low unemployment. No recession looming. Why would there be QE? – Garth
———————————————————–
I agree there will be no QE two; it it just going to implode the next time. Many in the comment section are telling you what is happening in their neighborhoods and you and your financial advisors/staff should listen to them or not; your choice, but prepare!!
Over-extended people will pay for their actions, of course. Macro trends that determine portfolio returns are not changed by these poor choices in Canada, however. No implosion. The best defence in the future, as now, is a globally-diversified, balanced asset mix. – Garth
Both economies are growing. Low unemployment. No recession looming. Why would there be QE? – Garth
————
JPMorgan: The Fed Will Need To Restart QE Soon
https://www.zerohedge.com/news/2019-08-10/jpmorgan-fed-will-need-restart-qe-soon
The zero guy. Wrong again. – Garth
Whatever happens in the next year or more some class of assets are bound to go on sale. Oh, excuse me while I sign off now and put in a sell order to take some profits made on IPL-T.
#27 Dog Breath on 08.11.19 at 6:49 pm
If you are going to quote someone, at least get it right.
“Money for nothin’ chicks for free”
But alas.You”ll never even know I replied to you…
Over-extended people will pay for their actions, of course. Macro trends that determine portfolio returns are not changed by these poor choices in Canada, however. No implosion. The best defence in the future, as now, is a globally-diversified, balanced asset mix. – Garth
—————————————————–
Completely agree, I followed your rules but also have diversified into cash, silver and zinc just for the fact I see what is going on in my part of the world; I read the comment section and notice what is happening in their part of the world, it is scary out there Garth!
Always appreciate your opinions!
Meanwhile in Australia, record snowfalls.
https://www.news.com.au/technology/environment/commuters-warned-not-to-drive-as-snow-and-90km-winds-continue-lash-south-east-australia/news-story/93c5a414eb8f7d224f8ea83b13333951
Climate Change is happening!
Wow so many things wrong here you are definitely a government propaganda believer. Just Wow. The reason the stock market is going up is because there is no yield in the bond market sending cash to the stock market if the stock market doesn’t beat new highs quick look out below. Con fidence.
Cheers.
Out here on the left coast us old school guys are getting creamed. Lumber down: mills closing. Copper down: mines hurting. Seafood down, salmon & herring decimated: Commercial Fishing Industry in collapse .R/E slow & sad.
Meanwhile the millennials are killing it. Billions of U.S.$ real money. Disney, Netflix,HBO throwing money around town like no tomorrow. And those silly geeks I figured were lazy & useless taking computer arts at Emily Carr are “finishing” movies digitally from all over the world & making shoot em up computer games. Which by the way are higher grossing than movies. They got their own Beaver floatplane & their chicks aren’t free. Starlets not groupies.
Tune up some of you bloggies. Think everyone is wailing from the same funeral dirge. When guys are on the load they don’t have time to get on the blower. Nobody is going to invite you over to share in on the spoils.
And I thought we were crazy:
The Brazilian President has suggested people poop every other day in a bid to save the planet.
Jair Bolsonaro was asked by a journalist about agricultural development and protecting the environment. He has recently come under fire after official data found an increase in deforestation in the Amazon.
“It’s enough to eat a little less,” he responded. “You talk about environmental pollution. It’s enough to poop every other day. That will be better for the whole world.”
https://www.msn.com/en-ph/news/world/poop-every-other-day-to-save-the-planet-brazilian-president-says/ar-AAFESRz?ocid=spartandhp
This is a new world order where classical economic teachings are no longer valid.
The dismal Science is becoming the useless Science.
Fear is becoming sub servant to greed.
Yield and supply curves are turned upside down.
Let’s bring in the Austrians.
I think some good old fashioned constructive destruction could restore sanity.
The believe that debt can be managed by borrowing more is insane.
The piper has to be paid.
Sooner or later.
India and Pakistan are standing toe to toe with nukes, threatening the food supply of 2 billion people. Hong Kong protesters are about to be crushed by a paranoid communist government rightly worried that the protests may spread to mainland China. Forest fires in Greenland. UK about to undergo upheaval.
And your talking about interest rates and investing for the future?
Let me guess, you work for commissions.
I’m worried I wasted the last years of my existence working for pieces of payer and digital information in a computer somewhere.
The shit is getting real.
GOVERNMENT should have kept their paws out of the housing regulations to begin with.
Let the markets handle themselves on their own. Stop trying to save the suckers cause we’ll always have them, they never learn.
Let those who need to burn in order to learn do just that.
Upset tummy maybe?
That’s me smiling. – Garth
One of your best comments, Garth!
In case US lowers the rate in September and October, would that bring the CAD in a better position against USD than it is now? And what’s the tendency of our CAD against EUR?
Correct me if I’m wrong, but….
Surely Canada cannot afford a strong CAD with its weakening economy?
The CAD needs to go down to stabilise our exports.
How can the CAD be forced down? With a zero-rate.
Good for exports, but very bad for housing-affordability.
And this is exactly how I know that things are going in wrong direction.
https://twitter.com/spectatorindex/status/1160764897191325696?s=20
https://youtu.be/VcGruMAIzRs
Almost midnigh here. .
Garth,
Thanks for the finance education your blog provides. When you have a chance can you please write how negative interest rates work so that we can get our head around it.
Regards,
Arun
Garth , rates going back down so soon ?
Rising sovereign debt has consequences
Sovereign debt is not dictating this monetary policy. – Garth
@#67 Arun of Oz
“can you please write how negative interest rates work so that we can get our head around it…”
++++
Look to Japan’s economy since the mid 1990’s for guidance young grasshopper…
And now their anti immigration policy + a rapidly ageing population will reap the whirlwind….
https://www.economist.com/graphic-detail/2019/07/09/japans-pension-problems-are-a-harbinger-of-challenges-elsewhere
The plus side?
The Japanese countryside is emptying out and wild animals are beginning to recover.
https://www.eenews.net/stories/1060087697
My simple analogy for negative rates is this… Typically you put money in the bank and they pay you interest. (Ok some of you are laughing but let’s continue) Now think if it being more like a parking lot where you have to pay to park your cash. Effectively it’s a negative rate.
#50 akashic record on 08.11.19 at 9:56 pm sez:
“What a world – chapter two
Results of the New York City medical examiner’s autopsy of Jeffrey Epstein have been released… kinda… saying its determination is “pending further information at this time.”
———————————————————-
Yes. I’m sure Epstein suicided via 12 gauge blast to the face, then he cut his own fingers off, therefore making ID of the body impossible.
Rates, when the money becomes worthless like Venezuela then we will see how great having debt, real estate is.
Falling rates make money worth more. Try to keep up. – Garth
The theories about the demise of Epstein went wild yesterday like never before. I just ignored the white noise of it all, and need no more nonsense. Just stick to the real facts, and don’t get carried away.
So much for the normalization of interest rates. I wonder if anyone over 50 will ever see rates “normal” again in their life time.
Of course you will. Don’t be a victim to recency bias. It ever ends well. – Garth
I can see this happening what Tyler said, it is not the falling rates that will make money worthless, it is all the money that keeps getting printed and made from nothing produced from the real economy. This is not a real economy anymore with free enterprise, capitalism but a socialist cesspool economy.
In the future nobody will admit when their money can’t buy even toilet paper. It is already started for the last 4 years now with property taxes, water rates, garbage fees, carbon taxes, higher income taxes, high rents, the most inflated housing prices, health care costs, medical costs etc. etc. etc.
Don’t worry I don’t know what I am talking about keep on going guys.
Although some might object to the website reporting the following never the less what is important is what is being reported.
Amazon is trying to sell tiny over priced shacks to underpaid landless people…. The genocidal real estate market and its supporters really have no scruples or know any limits to their greed.
Amazon Cashes in on Broke Millennial Market with Cheap Tin Shack Deal!
LINK DELETED
Crack up boom? Where’s all that EU money gonna go when the globalists fail to subordinate UK? Go go go Boris and Trump!! This is Adam Smith, animal spirits will rip Trudeau’s globalist handlers to shreds in the teeth of the human desire to better themselves. No we don’t want western civilization sublimated by a facist new world order of petty wankers like Trudeau. The markets going to boom boom , like it or not Trump Haters.
3 Potential Triggers For A Crack-Up Boom https://seekingalpha.com/article/4284670?source=ansh
Very likely that I will run my whole mortgage period paying rates at or near inflation. Are houses really that expensive in that context?
Owning a home isn’t for everyone for sure, and there are other costs associated with home ownership, but 600k @ 2.5% is 2300 a month @ 30 years. That buys you a SFH in most Canadian markets, and a condo or TH in every market.
In Kelowna that gets you a mortage that is at/slightly under the cost to rent a similar home (around 3K for a decent whole house). Of course owning the home will cost more when you consider prop taxes and maintenance but the delta is probably under 500 or so a month.
I think that is rates drop 25-50bps it makes the purchase decision pretty easy for families just on the outside looking in.
#78 Mattl on 08.12.19 at 10:40 am
Very likely that I will run my whole mortgage period paying rates at or near inflation. Are houses really that expensive in that context?
Owning a home isn’t for everyone for sure, and there are other costs associated with home ownership, but 600k @ 2.5% is 2300 a month @ 30 years. That buys you a SFH in most Canadian markets, and a condo or TH in every market.
++++++++++++++++++++++++++++++++++++++++++++++++
…interesting perspective…except you can’t lock in at 2.5% for 30 years…
#6
“That’s me smiling. – Garth”
_____
LOL! – Congratz BTW.
Hey #58 Fishman
I always enjoy your posts.
But: “When guys are on the load they don’t have time to get on the blower. Nobody is going to invite you over to share in on the spoils.”
Hint – if you are an old geezer, and still have the coding skills that are in demand (hand waving here) you can do fine without needing an armload of chicks and a plane. A dog to walk and a small boat to sail with the partner is just fine, thank you.
:-)
(BTW, I think why I’m still employed at my age are:
1) I try to be proactive and ZERO hassle for the management – give them reports, results, etc that they did not know they needed til AFTER they got them, and:
2) Someone once said “you are great at green-field programming – you just do what nobody else has done” which was a nice pat on the back, but not 100% true. However, coming up with what the client thinks are great ideas, and making them into reality is where it’s at.
I mention this just in case any coding-kids are reading – set the bar high, and strive for it)
#4 MF on 08.11.19 at 1:05 pm
……“And here we thought they would do the “smart” thing and normalize rates, with a slow relentless, rise in interest rates. Nope. Too dumb to do the right thing.
Now these retard central bankers have to reduce already reduced rates into a hailstorm of debt.”
Completely agree.
10 basis points per quarter could have been a gentle way to turn the screws on borrowing, but as you’ve noted, we’re continuing to descend into a cesspool of debt whilst these twits continue to pick their backsides.
As we continue paying them.
#79 PastThePeak on 08.12.19 at 10:52 am
#78 Mattl on 08.12.19 at 10:40 am
Very likely that I will run my whole mortgage period paying rates at or near inflation. Are houses really that expensive in that context?
Owning a home isn’t for everyone for sure, and there are other costs associated with home ownership, but 600k @ 2.5% is 2300 a month @ 30 years. That buys you a SFH in most Canadian markets, and a condo or TH in every market.
++++++++++++++++++++++++++++++++++++++++++++++++
…interesting perspective…except you can’t lock in at 2.5% for 30 years…
—————————————————–
Of course not, and anything can happen. But Porter knows more about markets then I do and he is the guy saying “forever” when it comes to low rates. Even at 2.9% or 3.2% money is incredibly cheap.
BOC rate has averaged 100bps for the past decade, it’s entirely possible we have a 15-30 year run of almost free money adjusted for inflation.
#13 Feds on 08.11.19 at 3:31 pm
“Can somebody please explain why tariffs of 10% on $500 billion of goods is enough to crush the global economy? Isn’t this essentially a tax of $50 billion, which is just noise in the era of trillion dollar deficits.”
Excellent point, however it isn’t just noise, it’s more (added to a helluva lot more) noise in the dirge of global debt.
You need to be able to skip like a leprechaun over the slippery stones of kinetic money or, have enough static stuff to last your lifetime in order to sleep at night these days……..
…..and a paid-off dwelling doesn’t hurt either.
Those with too much cash/debt sunk into re (90 – age) and/or toys are not where I’d like to be. Not now. Not ever.
Lost opportunity cost refers to so much more than money sunk into the wrong stuff or to excess. It also means truncating the full expression of a (short) life on a beautiful planet.
@ #16
Excellent post. Really great jeans (designer ones too) at my fave charity shop are on sale now for $1.00. Canadian. No tax. No kidding.
Bog standard ones at discount retailers are say, $25.00, plus tax (in my neck of the woods) = $28.75. Take a $27.75 savings and gross that single line item up by your marginal tax rate. Now take that formula and run it across most of the stuff you buy in a single year X number of years to retirement.
Sweet! A path for a retirement with far fewer worries than would otherwise exist by padding the profit margins of retailers.
A few days ago, a brand new Mercedes was parked right in front of “my” charity shop. Dang, I’ve got competition, but I did snag a 16″ high thistle-shape crystal vase in perfect nick.
Just a thought here. I see the comment “savers are being punished’ as a result of the low interest rates.
But if you hadn’t figured it out yourself, maybe from
Shawn and Stan’s comments, one parties debt is
another parties savings, and we are awash in both.
So if these low rates were the catalyst for debt, then they also created the savings. If rates had remained
near “normal” wouldn’t we just have less savings
overall, but earning higher interest?
What do you think about mortgages with bona fide sale clauses? Should I avoid them or are they ok?
Wait til September nay October when all the “kids” go back to school and jobs don’t exist anymore because of our Fed and Prov job makeup programs cease to be. These inflated the numbers in April -May. You just can’t trust gov’t…. or any other stats for that matter.
It is a different world now.
We had a neighbour sell their home (they just are retired now). They touted all about downsizing and moving to a condo. They saved nothing in the transfer of assets and now have to contend with strata fees. What a big mistake they gave up a nice 1250 sq ft home with zero maintenance as we really don’t have lawns here down-down for a 850 sq ft concrete slab with no view and smelly pot smoking neighbours. He dropped by the old hood this weekend and is now contemplating his mistake as he didn’t appreciate the strata fees, cost of running the unit is about the same as his home and all of the inconveniences of living in the sky. I told them last year don’t by a condo wait for at least a few years as they have escalated in price due to the regular SFH being UN-affordably high (stress test and such). People have artificially driven the condo market up to ridicules levels all over the GTA. That doesn’t appear like a savings to me. In fact IMHO he has lost.
Looks like MMT (Modern Monetary Theory) is coming whether we like it or not!
#24 Billie Eilish Rules! #Gen Z, not ancient Millenials! on 08.11.19 at 5:47 pm
social trends : according to pew research
millenials + Z= diverse /educated voters outnumber the boomers
Gen Z, Millennials and Gen X outvoted older generations in 2018 midterms
https://www.pewresearch.org/fact-tank/2019/05/29/gen-z-millennials-and-gen-x-outvoted-older-generations-in-2018-midterms/
============
whatever happened to separation between state and religion?
the “fellowship ”
“The Fellowship.” Headquartered in Arlington, Va., the group focuses on what Fellowship leaders call the “up and out,” or powerful politicians struggling to confront their personal demons. By ministering to the most powerful, The Fellowship believes, it can bring Christian beliefs to the larger culture. Jeff Sharlet, who wrote a book about his time in The Fellowship’s Virginia headquarters, said the group believes that lawmakers have been “chosen” to lead by Jesus Christ.
Uses the C Street Center for “faith-based diplomacy
https://www.politico.com/story/2009/07/c-st-where-scandal-meets-spirituality-025139
==================
Doug Burleigh is a key figure in the organisation and has links with organisers and spoken at the Russian prayer breakfast beside Alexander Torshin.[19][20] Burleigh stated in 2017 that “a breakthrough in relations between Russia and the US is about occur”.[73] Maria Butina, who has admitted to working as an undeclared Kremlin agent, helped arrange for five Russians chosen by a top official to attend the 2017 National Prayer Breakfast which she also attended before she was indicted and jailed.[74] Butina’s main contact in Russia was Alexander Torshin.[74]
#78 Mattl on 08.12.19 at 10:40 am
Very likely that I will run my whole mortgage period paying rates at or near inflation. Are houses really that expensive in that context?
Owning a home isn’t for everyone for sure, and there are other costs associated with home ownership, but 600k @ 2.5% is 2300 a month @ 30 years. That buys you a SFH in most Canadian markets, and a condo or TH in every market.
_________
Yep, easy cheap rates are THE reason RE has shot thru the roof. If you can fog a mirror, you’re approved. Same thing with regular folks buying 70+ thousand dollar new pickup trucks thanks to financing for 5-7 years at 0% ($217.00/week).
If you are a move up buyer with a paid off home that was bought a couple decades ago and rode the wave up – it’s actually EASY to buy 1 million dollar houses.
If I sold my place, put the proceeds down, and bought a million dollar mcmansion at 2.5% for 30 years, it would be about 2300.00/month. Compare that to our current house at 123K for 6.4% for 25 and a 1100.00/month payment back in 2001. That mil.$ house mortgage is about a 5th of our gross, I can’t see how that would be problematic. We definitely don’t really make the big bucks either.
The reason that this won’t be happening is because of the 10-12K+ annual property tax bill on these places (5 figure property tax bills are better spent on nice trucks, boats, ATV’s etc.. rather than some city employee’s pension and salary increases).
Many young couples have decent dual incomes, many middle aged and up have a long paid off SFD’s, some have two good jobs AND a paid off house. That is a load of people who can potentially spend 600-1000000 on a house.
back in june :
“About 128 members of the CRA, with help from the Royal Canadian Mounted Police, took part in the operation to search the locations for evidence of crimes against the Income Tax Act and the Criminal Code.
An army of investigators raided properties in Windsor, London and several other cities across two provinces Wednesday as part of a probe into $8.3 million in alleged tax evasion schemes.
The Canada Revenue Agency said it executed 15 simultaneous warrants in Ottawa, the Greater Toronto Area, London and Windsor in Ontario, along with Gatineau, Laval and Montreal in Quebec.
==
E-verify program
E-Verify
https://www.e-verify.gov/
E-Verify is a voluntary program. However, employers with federal contracts or subcontracts that contain the Federal Acquisition Regulation (FAR) E-Verify clause …
What is E-Verify · Employers · How To Find Participating … · E-Verify Overview
https://www.e-verify.gov/
=================
cheap labor ?
Employers including farms, nurseries and wineries, routinely employ people who are in the United States illegally but who can produce a Social Security card or work visa. Many agricultural employers say it’s not their responsibility — and that they lack the expertise — to determine if the documents are genuine.
============================
Feds: Forgery operation in Oregon produced over 10,000 fake documents
“The fraud ring operated in Woodburn for more than a decade and produced over 10,000 fraudulent documents that they distributed in Woodburn or mailed to customers around the United States,” U.S. Attorney Billy Williams and Assistant U.S. Attorney Peter Sax said in the plea agreement
Author: ANDREW SELSKY, Associated Press
https://www.kgw.com/article/news/crime/feds-forgery-operation-in-oregon-produced-over-10000-fake-documents/283-f54d33d3-a28a-41b3-8506-bf0729b6d999
That 24,000 job loss is net….it’s hiding the fact Canada lost 69,000 private sector jobs in July…..not good.
That’s the equivalent of the US losing 700,000 private sector jobs in one month!
But hey we created 17500 public sector jobs…..awesome.
#89 JB on 08.12.19 at 12:56 pm
We had a neighbour sell their home (they just are retired now). They touted all about downsizing and moving to a condo. They saved nothing in the transfer of assets and now have to contend with strata fees. What a big mistake they gave up a nice 1250 sq ft home with zero maintenance as we really don’t have lawns here down-down for a 850 sq ft concrete slab with no view and smelly pot smoking neighbours. He dropped by the old hood this weekend and is now contemplating his mistake as he didn’t appreciate the strata fees, cost of running the unit is about the same as his home and all of the inconveniences of living in the sky. I told them last year don’t by a condo wait for at least a few years as they have escalated in price due to the regular SFH being UN-affordably high (stress test and such). People have artificially driven the condo market up to ridicules levels all over the GTA. That doesn’t appear like a savings to me. In fact IMHO he has lost.
——
Renting would have been a better option in. Saves on all the headaches, strata fees, and locked in capital.
S.Bby: So if we get to zero or close to it interest rates then what happens if the economy doesn’t respond? Then there are no more rabbits to pull out of the hat. We go negative? Then what? The logical conclusion to all of this doesn’t look too promising to me.
There’s always going to be one more person that’s willing to take on more debt, but the central banks need more. It’s psychological. Herdonomics. Once people decide they don’t want more debt, small reductions in interest rates don’t matter. If someone has a $600,000 mortgage, a small reduction doesn’t matter.
I think this blog is making a difference. It’s telling people not to buy a house they cannot afford.
Also, the central banks have already tried this. They dropped interest rates to zero after the great financial crisis. Psychology was different then, people were more willing to take on debt. It’s not going to work this time.
The logical conclusion will be the economy is in recession and dropping interest rates doesn’t help. Or at least not very much.
#86 Vampire Studies
it’s all debt, vamp.
debt created out of nothing.
#87 Jimmy Jack on 08.12.19 at 12:30 pm
What do you think about mortgages with bona fide sale clauses? Should I avoid them or are they ok?
——————————
First are you actually planning on paying off your property before the term of the mortgage is up by means of other than selling it i.e. jumping ship to another lender or showing up at the bank with a suitcase full of cash? Second, is the discount incentive enough to be locked in for the term if you crave that flexibility?
Or did your BIL just toss around some terminology at the weekend BBQ and now you have to answer for it? (don’t laugh, its a thing)…
Your view has changed in 2 weeks (July 29th): “Now, Wednesday. The American central bank rate will drop a quarter point. There may be another one (or even two) after that by the time of the US election at the end of 2020. But this doesn’t mean rates are reversing and heading for zero. In fact, the Bank of Canada won’t even react this year. Maybe not in 2020, either.” On the topic of further QE, don’t bet against it (as the next available FED tool) if US interest rates approach zero – which likely depends on whether Trump strikes a deal with China.
#6 Bytor the Snow Dog on 08.11.19 at 1:11 pm
“Hey Garth, what’s with the pic of you and Dorothy? You don’t seem to be your happy-go-lucky self. Upset tummy maybe?”
That’s me smiling. – Garth
—————————————-
ha ha, good one Mr. T.
So nice to finally “meet” Dorothy.
The woman’s a saint to tolerate your daily immersion into dog debacles.
#16 SoggyShorts on 08.11.19 at 4:01 pm
#1 AGuyInVancouver on 08.11.19 at 12:40 pm
The official inflation numbers have been garbage for a long time. Anyone going into the local Starbucks can see that.
*************************
Well, that’s just silly.
Of course, really dumb name-brand luxury stuff goes up a lot.
Beats by Dre headphones which are nowhere near being the best sounding headphones are $200, that doesn’t mean you have to buy that garbage.
Starbucks coffee isn’t the best coffee, and it most certainly isn’t 2x or 10x better than the alternatives that are 50-90% cheaper.
A new iphone which does not have the best features available for phones costs more than the phones that do have the best features.
The same probably goes for a pair of jeans- inflation on whatever the coolest name brand is might be 20%, but such purchases are idiotic and shouldn’t count if you can buy the same pair of levis you’ve always bought at 2% inflation.
You can’t be a stupid consumer and complain about prices.
_ _ _
My comment had nothing to do with the quality of Starbucks coffee and everything to do with its price inflation. You sound like one of those bitter old men getting their joe at McDonalds and convinced they’re winning.
A question from someone who’s admittedly done everything wrong so far. ..I’m 50, female, have a house with a 100K mortgage, a measley 50k in a pointless Rrsps savings acct, and a federal defined benefit plan.
I want to move my 50K RRSP into 60/40 balanced ETFs per your guidance. But is there anything particular I need to be careful of, since it all has to stay within a RRSP acct.? Any type of ETFs that would be unwise to hold as an RRSP, or anything I should know from a tax perspective?
It’s called FIRE, which means ‘financial-independence-retire-early.’ The movement’s grown exponentially over the last few years, now encompasses a gazillion web sites, books and vids.
———————————————————-
The idea of FIRE is catching on? I still don’t see it as that popular in a society that appears to be obsessed with consumerism and conspicuous consumption. Wow, I was 30 years ahead of my time thinking such a thing is even possible. Well the good news is it is possible if you have a good income, keep your expenses are under control, and have discipline with investing.
It’s something that I could easily write a book about. I found during my saving I was often asked dumb questions like: why don’t you buy a new car? I said: why do I need 2 cars? The reply I got was trade my existing one. I NEVER saw the logic in getting a new car if the one I already had worked just fine. You’ll often be called cheap or stingy. Oddly enough, I was never the one trying to get as much overtime pay as possible when the work place was busy. Hey, you still have to have a life while saving. I was told I was somehow depriving myself by not buying more junk that wouldn’t at all increase my happiness, not one bit. What you really want is time, not more useless stuff. Just ask older people like my parents, in their eighties, who are downsizing and getting rid of stuff.
Don’t panic when stock markets drop. That’s when you should buy more, like the engine governor that responds to a drop in speed by opening up the throttle to increase the power output.
Last but not least be patient. Unless you get lucky with buying some penny stock that becomes the next Google or Microsoft, it’s going to take many years of saving and investing but it will be worth it. Remember the saying that the secret to becoming wealthy is a lot of work, that’s why it’s remained a secret for so long.
Well Garth???
It certainly appears that, “THIS TIME, IT IS DIFFERENT”!!
Why? Did I miss an asteroid attack? – Garth
You said up not that long ago… have things really changed that much? Maybe if you weren’t looking at the big picture. Too much debt. The future is (mostly) written. IMO.