Silver linings

RYAN   By Guest Blogger Ryan Lewenza

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Not sure about you, but I’m finding it a struggle to remain my normal chipper self. Even the Dalai Lama must be feeling a little melancholy these days. We’re currently in the worst global pandemic since 1918, the US/global economy has suffered its deepest downturn since the 1930s, and we’re witnessing the worst race riots in the US since the 1960s. 2021 can’t come fast enough!

While the headlines booming from the TV, newspapers (yes millennials these still exist), and the internet are all so scary and dour, there are some silver linings that are developing. Today, I highlight a few key positives that I see for the economy and equity markets.

First, there has been a significant turnaround in the technicals for the major equity markets. After that disastrous Feb-Mar decline of 37% for the S&P 500, the equity markets have rallied sharply on government and Fed stimulus, the re-opening of the economy, and receding fears over the coronavirus.

As a result of the strong gains, the S&P 500 has broken back above its key 200-day moving average (MA). This provided good technical support in 2019 so it’s an important level and milestone.

Now in the short-term the equity markets are technically overbought (lower panel), suggesting the potential for a consolidation/pullback. I would like to see the markets take a “breather” for a bit and work off this overbought condition and rebuild internal energy. This could then set us up for additional gains. I’m bullish longer term, but there will pullbacks along the way.

The S&P 500 Broke Above the 200-day MA

Source: Stockcharts.com, Turner Investments

Another positive was the improvement in the key US manufacturing index – the Institute of Supply Management (ISM). This is one of the most important indicators I track and if I was stranded on a secluded island and there was one economic report I could access to track where the US economy is, this would be it.

The ISM report tracks manufacturing activity in the US and is a leading indicator as it moves before other indicators. In January the ISM was at 51 and hit a low of 41.5 in May, which was the lowest level since 2009. In June it strengthened to 43, which was a nice positive, and could indicate that we’ve hit the low in economic activity for this downturn.

One reason why I like this indicator is that it has a high correlation (moves together) with the S&P 500. Since 2010, the correlation between the ISM index and the year-over-year change in the S&P 500 is a high 76%. Generally a strong or improving ISM is good for stocks and a weak or declining ISM is bad for stocks.

We can’t get too excited just yet as 43 is still a weak level and below 50 indicates contraction in the US manufacturing sector. But this indicator shows: 1) we may have hit the low of economic activity in May; and 2) the US economy could be turning a corner. Now I would like to see a rebound in consumer confidence and jobs in the coming months.

S&P 500 Is Strongly Correlated with the ISM

Source: Bloomberg, Turner Investments

One reason I believe the markets have rallied significantly is all the Federal Reserve stimulus. The Fed has taken interest rates to 0.25% and is buying over US$2 trillion in government and corporate bonds. The combination of the deep recession and the Fed’s aggressive policies have driven the US 10-year treasury yield to a ridiculously low level of 0.65% as of May 29. Basically the Fed is driving interest rates to stupid low levels to help drive asset prices (i.e., stocks) higher.

Currently, the S&P 500 is offering a dividend yield of 2%, which is 135 bps above the US 10-year yield at 0.65%. This is an all-time high spread of US large-cap dividends to US government bond yields, and one important reason why stocks look relatively attractively. Too often investors focus on an asset prices in isolation, but not in relative terms, which is very important.

I believe until the Fed turns to a tightening bias (i.e., hiking interest rates), these low interest rates will be bullish for the equity markets.

S&P 500 Dividend Yield At Record High to US Treasuries

Source: Bloomberg, Turner Investments

And finally some potentially positive news on the virus, a leading Italian doctor said over the weekend that the virus is losing its potency and becoming less lethal. According to the doctor, “The swabs that were performed over the last 10 days showed a viral load in quantitative terms that was absolutely infinitesimal compared to the ones carried out a month or two months ago.” This has not been substantiated by others yet, but it is coming from the frontlines and a respected source.

We need more of these small victories or silver linings, given everything we’ve been through in the last few months. Hopefully better days are ahead and a more prosperous and less scary 2021.

Ryan Lewenza, CFA, CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Vice President, Private Client Group, of Raymond James Ltd.

 

125 comments ↓

#1 Dharma Bum on 06.06.20 at 9:09 am

Bye-bye, scamdemic.

#2 Flop... on 06.06.20 at 9:18 am

Not sure about you, but I’m finding it a struggle to remain my normal chipper self.

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

Well, thunderstorms are going again, no sleep for me.

Just completed a work report on the previous thread.

Physically, I feel a little ragged, mentally this year I feel great.

The media keeps telling me I’ve got a problem, I just push it to the side and proceed.

We’ve collectively got issues, which I am doing my part to not spoil anyone else’s day.

Don’t remember coughing in anyone’s face.

Don’t remember putting my knee on anyone’s neck.

What else can one do…

M45BC

#3 Andrewski on 06.06.20 at 9:30 am

Another informative post Ryan. We’ll see what happens to Covid numbers in a few weeks after the many recent BLM protests around the world. If there’s a 2nd wave, those who missed the March market dip may get another chance to increase their positions.

#4 crowdedelevatorfartz on 06.06.20 at 9:33 am

Well.
If the jobs recover as quickly as the stock market things might be looking up …but my inner voice tells me something different.
“Elevator going down.”

#5 the Jaguar on 06.06.20 at 9:43 am

Love the photo of D&G in front of the old BeeMo branch. A fitting acknowledgement and award for your efforts and especially meaningful in a little Unesco Heritage Town.

Ryan, one other small victory that this pandemic may have handed us ( though you won’t be able to chart it ),
is that the shock and awe of the world grinding to a complete halt and people temporarily (hopefully) out of work with no savings back up may just knock some sense into people. They might now finally realize their vulnerability and start putting some money away and paying down their debt. One can only hope so for their sake.

#6 Flop... on 06.06.20 at 10:04 am

Was watching tele last night ( murder mystery) and during a commercial break I glanced down at the iPad.

Upon looking back up I saw the word ‘Tasmania’ in bold writing staring back at me.

I thought I must have overdid it at work this week.

The previous job did have a small gas leak.

Next commercial break the add was on again, apparently advertising potty mouthed Brit Gordon Ramsay’s new show on National Geographic.

The words flashed across the screen, Norway, South Africa, Tasmania, Indonesia, the first thing that flashed through my head was, do they know that it’s not a country?

Anyway, apparently it is being shown tomorrow, it might give some insight as to why I’m so warped in the head.

Either it was my upbringing, or the following alcohol abuse and too many hits to the head playing Aussie football.

Same result…

M45BC

“Description: Chef Ramsay explores Tasmania, off the coast of southern Australia; he discovers the purity of the island, diving into shark-infested waters for giant saltwater spiny lobsters; avoiding venomous snakes in the bush while foraging for local herbs.”

Show: Gordon Ramsay: Uncharted

Air date: June 7, 2020

#7 Do we have all the facts on 06.06.20 at 10:28 am

Always appreciate feedback from professional in the field.

I have always found it useful to compare the current book value of each share in a company to the current market price. Once this comparison is made one can decide if the difference in valuation makes sense.

The metrics behind any companies current performance are useful in determining value but have only limited value in trying to predict what the future has in store. The Covid 19 lockdown increased the liabilities incurred and reduced the market value of assets held for many companies. The reduction in current book value per share may not be accurately reflected in the current market value per share of many companies.

This may not become a problem if the value of assets held by a company increase or if the volume of liabilities is reduced at some point in the future.

Earnings generated by a company have a direct impact on the market value of their assets. Unfortunately the assumption of additional debt, even at very low interest rates, will reduce book value.

In the past Generally Accepted Accounting Principles have allowed companies to manipulate their financial statements in one quarter to support the market price of their shares. When corrections are finally reported the share price is adjusted to reflect a more accurate book value.

I find it difficult to believe that the value of assets held by many companies did not decline during the Covid 19 lockdown or that the assumption of additional debt did not increase their liabilities. If the book value per share has not actually recovered to pre-Covid 19 levels the recent increases in market value per share of many companies must be based on a belief that the price to future earnings ratio will improve.

Given that the over 60% of the North American economy is driven by domestic consumption the belief that unemployment rates north of 10% will result in higher earnings for companies dependant of consumer spending seems overly optimistic.

I have no doubt that both the Canadian and American economies will improve in the coming months but I fear it may take several years before the true book value per share of many companies recovers to pre-Covid-19 levels.

If the projected increase in earnings built into the current market value of many shares does not materialize due to high unemployment some level of correction will probably occur. This scenario suggests that some caution should be exercised.

I do not pretend to be an economist but I have watched the shenanigans surrounding the valuation of stocks for over 50 years and have learned to take an peek or two behind the curtains before pulling the lever.

#8 cowtown cowboy on 06.06.20 at 10:43 am

A million nw by 30 is pretty impressive Garth.. I was still trying to figure out what I wanted to be when I grew up at 30..
Getting closer to the mil mark now but I’m a far cry from 30…If I can just stop buying junior O&G’s I might just get there!
I’ve never been too interested in the pursuit of money, always found it a bit distasteful but as you get older you realize you want more and can be more..unfortunately the kids of today will probably need a decade or so before they realize that too..

#9 Stimulus on 06.06.20 at 10:45 am

The trillions of dollars in Government stimulus has pushed the stock market to almost new high. Dow went up by 9k in just 3 months, an average of 3k per month. We expect Dow to be at 40k by year end.

#10 Karla Germaine on 06.06.20 at 10:50 am

The WHO have refuted this Italian doctor’s claim.

#11 gfd on 06.06.20 at 10:50 am

Capital region job market not as strong as numbers suggest
James Bagnall ([email protected])
Published: 22 hours ago

Amid the wreckage of job markets across the country, the capital region on the surface appeared to hold up well in May.

While Statistics Canada reported on Friday that our jobless rate jumped to 8.4 per cent compared to 6.9 per cent in April, that was considerably below the 14 per cent plus unemployment rates estimated for Canada’s three largest cities.

However, a closer look reveals our job market really isn’t much stronger.

It’s a matter of what’s being measured. Toronto, Montreal and Vancouver are sufficiently big to permit a May-only sample by Statcan’s surveyors. Ottawa-Gatineau is not. In order to smooth out the inevitable fluctuations of a relatively small sample of households in the capital region, Statcan blends the most recent three months together.

Related
Unemployment rate hits new record even as economy adds jobs
Posthaste: Canada’s unemployment rate about to hit 16% — with job recovery likely to be slow
Since the March survey took place shortly before COVID-19 related layoffs began in earnest, Friday’s blended numbers for Ottawa-Gatineau include one normal month and two weak ones. And that’s made a huge difference in the reported jobless rate.

To get a better idea of what’s happening in the capital region, consider how things would look if we roughly matched the experience of the three big cities.

Between February and May, Toronto, Montreal and Vancouver collectively shed 1.2 million jobs while their combined labour force (which includes people looking for work) shrank by half a million — representing net declines of 16.5 per cent and nearly 7 per cent respectively. (These numbers are adjusted for seasonal influences so they can be compared month to month.)

Assuming Ottawa-Gatineau’s job market weakened at the same pace, this translates to a loss of 128,000 jobs along with 54,000 fewer people in the labour force. Result: 109,000 unemployed in a workforce of 757,000 — for a jobless rate of 14.4 per cent.

This lines up with the May jobless rates for Toronto (15.4 per cent), Montreal (15.2 per cent) and Vancouver (14.1 per cent).

Of course, the capital region’s economy has some important advantages that might have slowed the reduction in employment somewhat, most notably a disproportionately large public sector and some very strong tech firms. Combined, the latter two sectors account for 30 per cent of the region’s workforce — and their employment levels appear to have held up throughout the pandemic.

As in other cities, however, the pandemic has hit key sectors here with exceptional force. Overall, Statcan reported that Ottawa-Gatineau’s employment collapsed to 695,700 in May — down nearly 73,000 from the pre-pandemic month of February. Again, this almost certainly severely understates the actual job loss because it’s a three-month blended average. Data for industry sectors, in addition, are unadjusted for seasonal influences. Nevertheless, the industry snapshot for May offers insight into how physical distancing has affected different parts of our economy.

As you might expect, hotels and restaurants have seen the deepest declines in employment, slumping from 45,500 jobs in February to 22,400 in May, a drop of 51 per cent. More than 20,000 workers in wholesaling and retailing lost their jobs over the same period, representing a decline of 20.4 per cent.

Most other sectors suffered significantly as well. More than 5,000 jobs disappeared in finance, insurance and real estate, a drop of 18 per cent while the number of people providing professional services fell by 6,100 to 67,400. Even public administration witnessed a decline of 6,800 jobs (3.8 per cent), but this was very nearly offset by the net gain of 5,500 jobs in high-tech over the three month period.

#12 AB Bound on 06.06.20 at 10:57 am

What a whirlwind of events
March: massive economic and health panic
April: massive government intervention
May: massive economic recovery and realization that the world isn’t ending
June: Massive riots and disregard for CV
July: Russia lands on the west coast?
August: Aliens land on earth?
September: Dinosaurs come back?

#13 SOMETHINGS UP on 06.06.20 at 11:18 am

The SHILLER P/E is now at it’s 3rd highest off all-time!

The RUSSELL 1000 is now higher than at the DOT-COM Bubble!

This BEAR-MARKET Rally will soon be over.

Those who thought it was a good idea to buy and hold rather than sell out of this OVER-PRICED market and build cash reserves for the next well deserved crash will be shaking their heads asking themselves “What was I thinking?”

#14 Jimmy Zhao on 06.06.20 at 11:29 am

Yes, I see some teacups with handles as well as head and shoulders in those charts.
Not to mention the support level and breakouts.

It’s gonna pop !

#15 GrumpyPanda on 06.06.20 at 11:39 am

Girlfriend and Dog are sleeping. Beside me on the couch. Almost noon on a Saturday. Combined with a great post, how can life get much better?

#16 Dougie on 06.06.20 at 11:41 am

Ryan, I appreciate your analyses, but as usual you base your conclusions on US data, often, as in this case, the S&P 500. Although the Canadian economy tends to follow the US like a trailer follows its tractor, it would be nice to see some analysis based on Canadian data from time to time.

#17 baloney Sandwitch on 06.06.20 at 11:42 am

….the virus is losing its potency and becoming less lethal.
Be careful out there. https://www.cnbc.com/2020/06/01/who-says-coronavirus-isnt-losing-potency-this-is-still-a-killer-virus.html

#18 akashic record on 06.06.20 at 11:44 am

Miracle COVID cure discovered by social engineering.

#19 Sail Away on 06.06.20 at 11:52 am

According to my biker buddy Gooch, the CERB has given a nice little boost to the struggling illicit drug trade.

Social advocates have been helping the homeless and hopeless complete their applications, which are, naturally, fraudulent, but paid anyway. Then cashed out and straight to Gooch’s place of business.

Cash economy in full swing.

#20 HelicopterTrudeau on 06.06.20 at 11:55 am

Will the govt be handing out more free money?! $4000 a month would be good.

#21 crowdedelevatorfartz on 06.06.20 at 11:57 am

POURING buckets of rain in Scamcouver this am.
Decided to beat the crowds and scurried to Safeway at 8am.
No customers.
No social distancing among the staff.
No frozen concentrated Orange Juice….?
Its weird, Safeway used to have one entire freeze full of frozen juices….
Now? half of one shelf……
Everything else is frozen eggo waffles and other process ed crap.
Mixing frozen OJ is soooo time consuming.
I guess the kids today insist on the premixed OJ served on large plastic bottles……saving the planet?
R-i-i-i-i-i-i-ght.

#22 joblo on 06.06.20 at 12:04 pm

So, what have I learnt?
Financial system needs stimulus
Insert Global risk?
next:
Food security?
Reduced China growth?
Interstate & Civil war?
Heatwaves?
Oil & Gas prices?
Water quality, quantity?
over to you WHO & World Economic Forum

#23 Frugal Xennial on 06.06.20 at 12:10 pm

Choose language carefully. Instead of “worst race riots” since the 1960s try something like “most powerful civil rights movement” since the 1960s.

#24 ImGonnaBeSick on 06.06.20 at 12:13 pm

Well Ryan, if it helps, I’ve already sent two of my techs back to the US to work on Ford and FCA projects.. my techs in Canada are still working but we are experiencing part shortages now for development. The backlog continues to grow, and we are forecasting a lot of work through the summer… As long as current events don’t result in a super second wave that shuts us all down again…

#25 Sky on 06.06.20 at 12:27 pm

“we’re witnessing the worst race riots in the US since the 1960s. 2021 can’t come fast enough!”

*************************
Did anyone else throw up in their mouth a little watching T2 take a knee? Trump’s capitulating as well.

Why not just go full Mao Cultural Revolution? The only thing missing in this groveling, humiliation-porn extravaganza is the 2′ high paper dunce caps and the self-denunciation signs hung around their necks. Masks are a rather poor replacement. And black? T2 has trouble keeping that particular color off his face doesn’t he?

It’s being drilled into our noggins that the US is a systemically racist country in order to justify all the looting, arson, and murder of police officers. And blacks are less than 15% of the population yet ‘racist’ America elected a black president. Not once. TWICE !!

And Canada? If you must virtue signal then do it for our own Japanese Canadians. Because that was some SERIOUS racism.

Property and businesses stolen. Thrown into internment camps for years. Delinquent and extremely inadequate reparations.

I know some of these victims personally. To a person – polite, hardworking, intelligent and forgiving of the horrible abuse that was inflicted on them. The polar opposite of the fraudulent and often violent protestors rioting in the streets today.

These protests aren’t about racism. They’re a political movement chock full of deluded and nasty SJWs who don’t know how to fill their time. Or their minds. Mass psychosis!

#26 Deplorable Dude on 06.06.20 at 12:40 pm

Sheesh apparently it’s protest season, I’ve still got my Covid19 decorations up.

Social distancing is so last week.

#27 crowdedelevatorfartz on 06.06.20 at 12:44 pm

Speaking of hypocrites…..

Trudeau has avoided Parliament for months due to Covid19 …… but he never misses the chance to rub elbows for a great photo op.

https://nationalpost.com/news/canada/anti-racism-protesters-march-in-toronto-trudeau-calls-systemic-racism-real?video_autoplay=true

Another $17 Billion offered to the Provinces…

I dont think Trudeau will be satisfied until he reaches the 1 trillion dollar mark on the National Debt.
Enjoy much higher taxes for decades Millennials.
Trudeau will deservedly be the pinata for your financial angst until your retirement…… :)

#28 Ponzius Pilatus on 06.06.20 at 12:47 pm

#19 Sail Away on 06.06.20 at 11:52 am
According to my biker buddy Gooch, the CERB has given a nice little boost to the struggling illicit drug trade.

Social advocates have been helping the homeless and hopeless complete their applications, which are, naturally, fraudulent, but paid anyway. Then cashed out and straight to Gooch’s place of business.
——-
Is Gooch the name of your Austrian neighbor from Ferlach?
Does not sound Austrian to me.

#29 Wrk.dover on 06.06.20 at 12:59 pm

One Doctor out of 7,000,000,000 people said something to give hope to markets.

Great news, for the markets apparently.

51 to 41.5 back to 43 because some inventory ran out…

Dow should be uppa 1,000 more points Monday.

I’m wearing out my welcome here.

I’m going to have to go back to my crab hole soon.

#30 Don Guillermo on 06.06.20 at 1:00 pm

#25 Sky on 06.06.20 at 12:27 pm
“we’re witnessing the worst race riots in the US since the 1960s. 2021 can’t come fast enough!”
*************************

These protests aren’t about racism. They’re a political movement chock full of deluded and nasty SJWs who don’t know how to fill their time. Or their minds. Mass psychosis!

********************************************
I like Candace Owens’ take on this. Gutsy outspoken young black lady.

https://www.youtube.com/watch?v=Vj7D4-VLZlQ#action=share

#31 Ryan Lewenza on 06.06.20 at 1:03 pm

Dougie “Ryan, I appreciate your analyses, but as usual you base your conclusions on US data, often, as in this case, the S&P 500. Although the Canadian economy tends to follow the US like a trailer follows its tractor, it would be nice to see some analysis based on Canadian data from time to time.”

I do cover the TSX from time to time, but the reality is we’re quite insignificant within the bigger picture/global economy. US GDP is $20 trillion versus our $2 trillion. Basically, where the US/S&P 500 goes, so goes Canada/TSX. It pains me to say it, but that’s the reality. But I’ll try to provide an update on the TSX soon. – Ryan L

#32 conan on 06.06.20 at 1:24 pm

I do not think there are any technicals with this market.
I think it is all this guy from Black Rock that Trump hired.
He basically has trillions of dollars to prop and sell the market at whim.
Could you make money if you are running the show?
I could, it means lots of V’s.

#33 colin on 06.06.20 at 1:25 pm

And in the midst of this, white supremacists are claiming “disrespect”, that the protestors should be honoring the 76th anniversary of D Day, not standing up for civil equality.

Hmm. June 6 1944. When thousands of soldiers from a white supremacist alliance of western nations launch an attack on an even more white supremacist European totalitarian dictatorship, not unlike the America that Trump is trying to create….?

I’m not seeing a lot to celebrate, sorry. Not nearly enough change has happened. (Do a little research on how Black, Indian, First Nations and other racialized soldiers were happily put on the front line to risk death in our military service, yet then treated worse than POWs in their own countries after the Civil War, WWI, WWII, Vietnam etc…

These are not “race riots” Ryan. One racial group is not attacking another. Your language is off key.

This is standing up for justice.

#34 Brian on 06.06.20 at 1:41 pm

#10 – The WHO have refuted this Italian doctor’s claim.

Didn’t the WHO also refute Taiwan’s claims?

#35 Sail Away on 06.06.20 at 1:49 pm

Pup Training:

Training a pup should never, ever be done when irritated. Always a gentle hand. If your patience frays, it’s time to stop.

To clearly establish physical boundaries- for example, in our house, the kitchen is a no dog zone- lay down a strip of painting tape, then rub it with vinegar. After a couple days of gentle removal reminders they understand it’s a boundary and will forever remember it.

After that, put two drops of vinegar on several rolls of painting tape and have a roll available everywhere- in the car, at the office, in your backpack… You can’t smell it but they sure can.

Camping in a tipi with a wood stove? Strip of tape for separation. Muddy dog at friend’s house after an outing? Strip of tape between carpeted room. Don’t want them rushing the doorbell? Strip of tape.

So easy. Train naturally. Dogs understand smell. The gobbledygook we yammer at them? Not so much.

#36 Democracy Is Mob Rule on 06.06.20 at 1:54 pm

Dow at 260,000 by 2032

https://solarcycles.net/2012/03/20/dow-at-260000-by-2032/

#37 Blog Bunny on 06.06.20 at 1:59 pm

Careful with the race riots – these people are violent anarchists trained to injure civilians. These are not spontaneous movements and they do not care about the poor sob killed by police. This was just the right pretext to start massive violence, theft, and unrest. I hope the US will recognize the threat and handle it appropriately.

#38 Democracy Is Mob Rule on 06.06.20 at 2:09 pm

RBC GAM has some great market analysis. The part I like the most is the Normalized earnings and valuations chart for S&P 500 (see page 54 at the link). You can clearly see how the 2009 bottom is similar to the 1974 bottom and that the 35 year stock cycle continues. The correction we just had is similar to 1987. Next top will be in 2032.

On the same chart for the TSX (page 56) you can see how Canadian stocks do better during the 30 year commodity cycle. That was in the 1970s, 2000s and next will be the 2030s. That will be time to switch from U.S. tech stocks to Canadian resource or global oil and gold. Sell those in 2040. After that everything will go down into the next 35 year market bottom in 2044.

https://www.rbcgam.com/documents/en/articles/global-investment-outlook-2020-spring.pdf

#39 Oracle of Ottawa on 06.06.20 at 2:13 pm

Good post, Ryan. I like the fact that you also think this rally has gotten ahead of itself. Perhaps there is a FOMO factor going on. I believe we’ll see the writing on the wall next month when earnings season begins. Perhaps that’s when we’ll get a pullback. As far as the virus is concerned, there was never a vaccine for the 1918 Spanish Flu and yet it has disappeared or assimilated into the common flu.

#40 Tax planning on 06.06.20 at 2:20 pm

Thanks for the post Ryan
If what I see in the stores people are spending spending spending. Every person over 70 says we are not travelling next year so we are renovating.
So yes I see some short term pull backs but pent up demand here we go!

I have a tax question.
I know make no assumptions, but I am planning my retirement at 65 and I am 60.
My question is in your opinion will the federal government change the OAS?
Option 1 reduce the clawback amount?
Option 2 cancel pension splitting between retired spouses.
Option 3 a combination
Option 4 another thought?

The reason I am asking is my pension will be very close to the clawback amount, but I can avoid the clawback because of pension splitting with my wife.
What are some options if OAS changes?
Do I withdraw my RRSPs over next 5 years?
I am taking CPP early and putting it all in a TFSA.
Same as my wife.

Thanks!

#41 Democracy Is Mob Rule on 06.06.20 at 2:24 pm

For those of you who think the stock market is overpriced, have a look at the charts in the link for market cap to GDP. In recent history the numbers are a bit high, but go to the chart for the Dow or S&P 500 and click on the ALL button to see history back to the year 1800.

https://www.longtermtrends.net/market-cap-to-gdp/

#42 Democracy Is Mob Rule on 06.06.20 at 2:34 pm

History is a great teacher with very few students. See what a difference a logarithmic scale makes on a chart.

https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart

https://www.macrotrends.net/1369/crude-oil-price-history-chart

https://www.macrotrends.net/2324/sp-500-historical-chart-data

https://www.macrotrends.net/1320/nasdaq-historical-chart

#43 Dries on 06.06.20 at 3:01 pm

Thanks Ryan, good post.

#44 Brian Ripley on 06.06.20 at 3:05 pm

My chart of the 6 biggest census cities in Canada is up:

http://www.chpc.biz/6-canadian-metros.html

​In May 2020 Montreal’s single family detached median prices hit a new peak as the animal spirits in Ottawa and Toronto joined in and posted a nice bounce as well in their SF detached prices.

There was not as much moxie in Vancouver where it still takes 3x 2016 StatCan Census Median Household Incomes to qualify for a mortgage.

It remains interesting to note that the average of the summed prices of Vancouver+Calgary+Toronto condos (black dotted plot) is 39% higher than a median priced Montreal SFD. Ex-Calgary it was 76% higher.

In FEB 2018 the metrics were 73% and 106% higher respectively!

#45 crowdedelevatorfartz on 06.06.20 at 3:06 pm

@#33 Colin
“This is standing up for justice.
++++++

Is that what were calling looting these days?

Declare martial law and shoot looters.
It would be over tomorrow.

#46 Democracy Is Mob Rule on 06.06.20 at 3:18 pm

Here is a chart similar to Ryan’s dividend vs treasury yield chart. It compares the price to earnings ratio to treasury yield since 1960. Note how the P/E ratio gets larger as treasury yields drop. If you ignore the tech bubble figures in orange, you can see there is a slope to the data. If you did a best fit straight line through the data, it would suggest a P/E ratio of around 45 would be average for the current yield. Based on that, current stock prices are the cheapest they’ve been since 1960, compared to treasuries.

https://www.advisorperspectives.com/images/content_image/data/6b/6b3c2cba1d9ed10a228190dc49cc714a.png

#47 crowdedelevatorfartz on 06.06.20 at 3:19 pm

@#33 Colin

Yo ! Colin.
Here’s your politically correct version of “standing up for justice”…..
Please note the Black owned businesses destroyed by your self described “justice committees”.

https://www.abc.net.au/news/2020-06-05/is-the-looting-in-the-us-tied-to-the-protests/12315884

As I said.
Declare martial law and shoot anyone caught looting, breaking and entering, arson, etc….

The looting, fires and destruction would end immediately.
Problem solved.
Then , perhaps, we could get back to the real issues at hand rather than taking advantage of the anarchy caused by a determined group of thieves to steal anything they can get their hands on.

But I suspect someone as self absorbed and naive as you are busy scrawling with crayons on white cardboard thinking up the next catchy slogan.

Pathetically, painfully predictable.
Let me guess, you have a Major in Psychology?
Back to Starbucks, they’re missing their barrista.

#48 willworkforpickles on 06.06.20 at 3:26 pm

#7 Do we have all the facts.
Justifiably so no matter where each and every mortal man stands on the economic ladder in life he/she has something to worry about if he’s paying any attention at all. Moving forward in these times of economic uncertainty with regard to equities, it becomes less worrisome switching to stocks with a teflon shell or those regarded as recession proof in concert with projected earnings and solid evaluations. Best to study these factors well before a downturn comes so that one can be well prepared in advance. Newbie investors who rush in without the tools to succeed get burned. I agree with your approach and words of caution.

#49 TrendIsYourFriend on 06.06.20 at 3:35 pm

Yes, overbought we are.
Made nice $ last 2 weeks with TLT puts and tens of stocks’ calls. Friday my bull scanner returned half a dozen names only (Bull scan when it comes to risk-reward ratio). Closed most of calls on Friday.
Put-call ratio screaming – time to be careful next couple of weeks. The band got streched too far to the up side.

#50 Sydneysider on 06.06.20 at 3:50 pm

In my household: I have been buying what I can afford since February, while my wife is still sitting on her pile of cash worrying that the markets may drop again.

My account is at its all time high, but it seems to me that the markets will further rise when people like my wife feel confident to take the plunge. After which it will be time to take profits.

#51 kingston boy on 06.06.20 at 3:55 pm

man, is it ever nice outside.

#52 GrumpyPanda on 06.06.20 at 4:15 pm

#35 Sail away. How can we apply the tape and vinegar trick to protesters?

#53 Barb on 06.06.20 at 4:16 pm

Please let that Italian doctor be correct…

#54 Joseph R. on 06.06.20 at 4:26 pm

#47 crowdedelevatorfartz on 06.06.20 at 3:19 pm

————————————————————–

One of your best work, Fatzy!

1. You have “concerns” about Black-on-Black violence;
2. you want summary justice solutions to complex issues;
3. You berated minimum wage earners; and,
4. You got to project your own self-centeredness on someone else.

You really “owned the libs” today. Have a cold one!

#55 Camille on 06.06.20 at 4:33 pm

Interesting that Ryan chose to write of, let alone observe comments from the Italian doctor regarding virus load.
It brought new vocabulary and science to the average person. And it particularly showed how this subject of epidemiology, now sanctioned on this blog, is evolving in the general population. It was quickly discredited by doctors, WHO, media, etc. Wrongly I believe.

#56 AB Bound on 06.06.20 at 4:35 pm

#50

Obviously there aren’t a lot of details here, but I just cannot fathom the logic of people like your wife… how can anybody be cash right now after a 40% decline with the money printer going brrrrrrr all day and all night.

#57 willworkforpickles on 06.06.20 at 4:35 pm

With the general economic recession due to be made official or generally speaking 45 days after a 2nd quarter in a row of economic decline and retraction, expect the official announcement mid August. We aren’t at the end of the second quarter of contraction yet but are as good as there from a recession standpoint regardless. The optimism flying around the past week would have us officially clear of recession 45 days after the 3rd quarter in mid November. But reality isn’t exactly pointing to economic expansion this coming 3rd quarter. Too many unemployed and permanent business closures/failures in the works for a turnaround that soon. With coronavirus expected to peak latter this year the economy is toast until early next Spring at the very least. Ongoing government gifting to the penniless will bring on inflation for essentials like most have never seen begging in turn for ever escalating still more gov free handouts.
Damned if they do Damned if they don’t and no long or medium term solutions from government in the works.

#58 I’m stupid on 06.06.20 at 4:49 pm

SUCK AND BLOW

WE’VE SPENT A COUPLE OF MONTHS SHUT DOWN BECAUSE OF COVID 19. THE GOVERNMENT HAS SPENT HUNDREDS OF BILLIONS OF DOLLARS AND JUSTIFIED IT BY SAYING THAT MANY LIVES WOULD BE LOST OTHERWISE. JUST LAST WEEK OUR LOSER PM SAID IT WAS TOO DANGEROUS FOR PARLIAMENT TO SIT. NOW THIS WEEK HE THINKS ITS SAFE TO PARTICIPATE IN A MASS GATHERING PROTEST.

THIS IS THE SAME PM WHO WORE BLACKFACE.

#59 colin on 06.06.20 at 4:51 pm

crowdedelevatorfartz

Your posts are narcissistic, vacuous and stupid.

And you are a racist idiot.

Get a life and go away.

#60 Sail Away on 06.06.20 at 4:52 pm

#52 GrumpyPanda on 06.06.20 at 4:15 pm

#35 Sail away. How can we apply the tape and vinegar trick to protesters?

—————-

Clearly we use black tape and hire a minority to float the theme that stepping on or over the tape represents historic stepping on or over minority rights. If you support the tape, you are protected. Nobody pure of mind and purpose would dream of stepping over the tape; only the oppressors would consider such blastphemy.

Then we need a slogan because they loves that sh*t. How about: ‘Black lines matter!’

Like garlic to vampires.

Once truly indoctrinated, heavy black lines can be drawn to the ocean and the hordes gently herded, lemming-like, to their Valhalla.

#61 BillyBob on 06.06.20 at 4:58 pm

Mentioned a colleague who died of Covid-19 in Spain. Just heard of another former one who had been working in Vietnam.

https://economynext.com/vietnams-epic-battle-to-save-uk-pilot-bring-results-amid-zero-covid-19-mortality-70704/

Late 30’s, no comorbidities.

Good thing it’s just a bad flu eh?

#62 BillyBob on 06.06.20 at 5:03 pm

#10 Karla Germaine on 06.06.20 at 10:50 am
The WHO have refuted this Italian doctor’s claim.

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

Ah, the highly credible WHO, the one with a director sponsored for his seat by China that was telling us months ago that masks were useless.

Today?
“Coronavirus: WHO advises to wear masks in public areas”
https://www.bbc.co.uk/news/health-52945210

That WHO?

I’m sure in a few months they’ll decide the Italian doctor was right.

#63 Ryan Lewenza on 06.06.20 at 5:11 pm

Tax Planning “ I have a tax question.
I know make no assumptions, but I am planning my retirement at 65 and I am 60.
My question is in your opinion will the federal government change the OAS?
Option 1 reduce the clawback amount?
Option 2 cancel pension splitting between retired spouses.
Option 3 a combination
Option 4 another thought?

The reason I am asking is my pension will be very close to the clawback amount, but I can avoid the clawback because of pension splitting with my wife.
What are some options if OAS changes?
Do I withdraw my RRSPs over next 5 years?
I am taking CPP early and putting it all in a TFSA.
Same as my wife.”

I don’t see much/if any, changes to OAS. Given the huge retirement shortfall, any meaningful changes like eliminating pension income splitting would only make the situation so much worse. Plus the Fed Libs have been expanding social programs for families and seniors so this would be completely at odds with how they’ve been governing. – Ryan L

#64 Tom from Mississauga on 06.06.20 at 5:17 pm

That kind of analysis is why the family’s money will be with you guys after Garth retires.
Our CEO at Congebec is concerned about plant closings and labour shortages in Canadian food supply, hoarding has moved from consumers to the wholesale market with Metro aggressively buying up inventory. BoC was right to reduce stimulus measures this week, watch out for Q320 inflation.

#65 Ponzius Pilatus on 06.06.20 at 5:22 pm

Regarding the Italian Doctor, attlached is an unbiased report for those who care for that sort of thing.

https://elemental.medium.com/could-the-coronavirus-be-weakening-as-it-spreads-928f2ad33f89

#66 Marco on 06.06.20 at 5:23 pm

#28 Ponzius Pilatus
……………………………….

Stop to harass zero. Zero is still a number.

#67 Sail Away on 06.06.20 at 5:25 pm

DELETED

#68 Marco on 06.06.20 at 5:36 pm

DELETED

#69 Cow Man on 06.06.20 at 5:46 pm

Yes the dividend for the S & P is the widest spread over the US Treasury yield; but so is the risk. There is a correlation between risk and reward. If the risk is high so should be the reward. If the spread is the highest then so must be the risk?

#70 Lee Stewart on 06.06.20 at 5:50 pm

So, a white guy in black face is racist, but Michael Jackson isn’t? Do you see the irony and inequality? White people have to stop walking on egg shells for fear of being called a racist and black people need to stop acting opressed because they’re not. They have a lot more rights than they did a century ago. If white people don’t speak up, then one day we’ll find black people in white face and we’d be too afraid to tell them it’s racist. There needs to be a level playing field. To any of you who disagree with my opinion, all I can say is rubber glue back to you. I’m not a racist as I have black friends and I’m free to say or type what I wish, thanks to the fifth amendment. I have guns on me and when the looting starts the bullets start.

This discussion is over. The blog is not a forum for this topic. Further posts will be deleted. – Garth

#71 Dave on 06.06.20 at 5:53 pm

CHMC made some changes to tighten the real estate market.

Are their adjustments significant?

#72 Ronaldo on 06.06.20 at 6:08 pm

#27 crowdedelevatorfartz on 06.06.20 at 12:44 pm

I dont think Trudeau will be satisfied until he reaches the 1 trillion dollar mark on the National Debt.
Enjoy much higher taxes for decades Millennials.
Trudeau will deservedly be the pinata for your financial angst until your retirement…… :)
————————————————————–
Exactly. Yes Millie’s, you will be paying for this free money for years to come. You will pay for what you voted for.

#73 NoName on 06.06.20 at 6:22 pm

@ I am stupid

Hey stupid I was wondering when you’ll show up. My AC craped out, I need new hi ef furnace and 2ton outside I’ll probably re use 5/8 line and coil inside probably just flush it few times and connect new stuff.

1700 sq-ft according to city tax dpt, but my measuring tape produces different numbers…

How much???

#74 BoredBear on 06.06.20 at 6:26 pm

@ Colin #59 “Crowdedelevatorfartz

Your posts are narcissistic, vacuous and stupid.

And you are a racist idiot.

Get a life and go away.”

Garth’s blog is his life.

#75 Do we have all the facts on 06.06.20 at 6:37 pm

#31 Ryan

If the American stock markets are the dog that wags the a Canadian tail it might be useful to monitor how long Federal Reserve intends to pump liquidity into their stock markets.

The correlation between increases in liquidity generated through quantitative easing and a low interest rate policy and the recent rally on American stock markets is hard to miss. Purchasing trillion of dollars of securities from financial institutions definitely stimulated the purchase of assets and equities seem to be the assets of choice these days.

When does the Federal Reserve plan to curtail their purchases and how will a reduction in regular additions to liquidity affect North American stock markets, including the TSX?

Inquiring minds would like to know.

#76 BoredBear on 06.06.20 at 6:50 pm

@CEF,

What is it like to be so clueless, yet so sure of one’s opinions?

#77 crowdedelevatorfartz on 06.06.20 at 6:52 pm

@#59 colin
“Get a life and go away.

++++

Sooooo you dont work for Starbucks?

How much does a tattoo “artist” make anyway?

#78 crowdedelevatorfartz on 06.06.20 at 6:58 pm

@#54 Joseph Arrrrrr
“One of your best work, Fatzy!”

++++

While I admit I’m slightly Rubinesque I dont believe I would be considered…… fat.

My apologies to fat people everywhere for Joseph’s insensitive labeling.
Fat Lives Matter.
Whew!
All this thinking and typing is hard and no participation medal for trying….. :(

Time for a cold one

#79 ImGonnaBeSick on 06.06.20 at 7:01 pm

#59 colin on 06.06.20 at 4:51 pm
crowdedelevatorfartz

Your posts are narcissistic, vacuous and stupid.

And you are a racist idiot.

Get a life and go away.

——

You forgot to call him a Trump sycophant, an anti-science deplorable, a caveman, a nazi, and point out his ad hominem attacks… But you nailed the rest of the left rebuttals… Good job, sorry you got your feelings hurt…

#80 BoredBear on 06.06.20 at 7:06 pm

#60 SailAway ” Then we need a slogan because they loves that sh*t. How about: ‘Black lines matter!’”

OMG, you are SOOOO funny. Why are you wasting your time on this pathetic blog? You should put that on a billboard.

#81 Westcdn on 06.06.20 at 7:12 pm

I learned a new Chinese word a few days back – Gongfei – communist bandit. The amount of looting I see these days from overt and subversive means is okay with too many people. The sjw shepherds are coming out of the woodwork which my father would say there is no shortage of lay about do-gooders. Carl Sagan – (The Dragons of Eden), had a lot of influence on me, same as Jared Diamond.

They both reinforced my willing to question and criticize. Generally it has not gone well but I will not play along when I have to surrender my morals. I was in a meeting with lawyers discussing a tax dodge – Question: is this moral? Answer: it is not illegal if structured right! Money carried the day.

Weren’t we supposed to grow without forever latching to a teat? Jack Cockwell of Brascan, now as now known as Brookfield and Bronfman money is a good story.

https://www.canadianbusiness.com/lifestyle/the-rich-100-the-man-behind-brascan/

They haven’t dropped the playbook. My favorite riches to rags is Edgar jr Bronfman.

#82 Britney on 06.06.20 at 7:32 pm

Ryan/Garth
As a balanced portfolio user with long term goals, would you invest now or wait for those pullbacks?

#83 Bytor the Snow Dog on 06.06.20 at 7:50 pm

#10 Karla Germaine on 06.06.20 at 10:50 am is paid to post:

“The WHO have refuted this Italian doctor’s claim.”
——————————————————
They have zero credibility. None.

#84 Democracy Is Mob Rule on 06.06.20 at 7:51 pm

#69 Cow Man on 06.06.20 at 5:46 pm
Yes the dividend for the S & P is the widest spread over the US Treasury yield. If the spread is the highest then so must be the risk?
________________________________________

Yes, but the current risk is in the treasuries, not the stocks. If interest rates go up, treasuries would decline. The risk would be in stocks if the spread was narrow. In the short run though, stocks are overbought.

#85 FlourPower on 06.06.20 at 7:52 pm

#65 Ponzius Pilatus has provided a good link. I’ll also add that docs at University of Pittsburgh Medical Center (UPMC), a top US hospital system, have seen the same “weakening.” Various ideas and possible explanations for it, beyond a mutation. Just sayin’ that it’s not only the Italians who have seen it.

News story from UPMC below.

https://triblive.com/local/regional/upmc-doctors-say-covid-19-declining-in-virulence-and-infection-levels/

#86 WTF on 06.06.20 at 8:03 pm

DELETED

#87 crowdedelevatorfartz on 06.06.20 at 8:16 pm

@#Bored Bare
“What is it like to be so clueless, yet so sure of one’s opinions?”

+++++

Very liberating!
But I was feeling a little down after that last “fat” jab from Joseph Arrrrr so I went for a 4km walk.
To try and rid myself of those last 10 lbs of lard around the waist ( not as hard as ridding one’s self of the 10lbs of lard around their brain eh Bare?)

But now I’m back
Time for another cold one.
Its thirsty being a one dimensional, arrogant troglodyte with delusions of greatness.

#88 NoName on 06.06.20 at 8:18 pm

#BalkanLivesMatter now while we are at it.

#89 Alberta Trapper on 06.06.20 at 8:27 pm

Ryan, good post, you expect a pullback from the Fed pumping in liquidity, “I call it a Rug Pull” so that Goldman
can short it, that is usually the case, then go long again.

I am riding the horse but moving up my trailing stops, as it is a Fed induced rally, when they turn the pump off, the water goes back down the hose.

#90 Suburban Bob on 06.06.20 at 8:27 pm

Boredbear – Agreed, I think it is time for CEF to take a pause. Those comments are becoming unhinged and extremist.

Take a breather fella and take care of yourself. Get outside and away from your laptop.

#91 Deplorable Dude on 06.06.20 at 8:33 pm

Murder Hornets…

What happened to the Murder Hornets?

Anyway settling down with some popcorn to watch the hypocritical covid19 granny murdering ‘protesters’ in DC tonight.

Just itching for one of them to breech the White House boundary to see what happens…

#92 Bytor the Snow Dog on 06.06.20 at 8:35 pm

#61 BillyBob on 06.06.20 at 4:58 pm whines:

“Mentioned a colleague who died of Covid-19 in Spain. Just heard of another former one who had been working in Vietnam.

https://economynext.com/vietnams-epic-battle-to-save-uk-pilot-bring-results-amid-zero-covid-19-mortality-70704/

Late 30’s, no comorbidities.

Good thing it’s just a bad flu eh?”
————————————-
Two out of seven billion. Not bad eh?

#93 Lobster Man on 06.06.20 at 9:00 pm

Ryan,

Thank you for a very good post.

Now, I have a question.

To every buyer there is a seller. So when the Fed dishes out 2 trillion dollars to buy treasury and corporate bonds, the sellers would receive the corresponding funds. What do they do with those funds? Of course, these sellers would acquire new assets, which presumably would provide a superior yield/return than the stuff they just sold, namely they will dive into the general equity markets etc.

In general, we all understand that higher yield means higher risk. Therefore, my question to you is: Do you think this is a stable situation, for the longer term, particularly if the longer treasury yields start to rise (yield curve stifling)?

Thank you,
LM

#94 Stone on 06.06.20 at 9:13 pm

#34 Brian on 06.06.20 at 1:41 pm
#10 – The WHO have refuted this Italian doctor’s claim.

Didn’t the WHO also refute Taiwan’s claims?

———

Hasn’t the world refuted the WHO at this stage?

#95 Stone on 06.06.20 at 9:20 pm

Nice post today but does it need to be this complicated? Here’s my take:

1 – Start a balanced and diversified portfolio.
2 – Continue to make contributions regularly.
3 – Rebalance the portfolio when the %’s fall out of wack
or when crap like March 2020 happen.
4 – Continue doing steps 1-3 religiously and forget about
the noise.

#96 TurnerNation on 06.06.20 at 9:31 pm

I suggest reading again Sky’s comments from yesterday’s blog. That’s what is is going on. And there’s a reason why ‘Zombies’ and zombie culture was pushed so hard past few years. The goal is mindless people destroying ‘brains’. By this I mean who is always the first target in Communist purges? Why it’s the professors and intellectuals. Purged for their ‘brains’ indeed.
History. Repeats.
We are in the Hive mind sell job.

By the way those Headlines are designed to get inside your head. Many people rarely read further.

#97 Lobster Man on 06.06.20 at 10:03 pm

#93,

Stiffening, not stifling.

#98 crowdedelevatorfartz on 06.06.20 at 10:43 pm

@#90 Suburban Bob
“Boredbear – Agreed, I think it is time for CEF to take a pause. Those comments are becoming unhinged and extremist.”

++++

My my.
Sitting in the “safe space” of the suburbs its easy to “judge”.
Declaring Martial Law during times of anarchy and allowing the use of deadly force for dealing with looting arson and murder is a time honored tradition among most countries that want to maintain Law and order.

https://www.foxnews.com/us/black-activists-theyre-armed-protect-businesses-riots-looting

https://losangeles.cbslocal.com/2020/06/01/santa-monica-owner-defends-his-store-with-guns-amid-looting/

Apparently I’m not the first person to think that maybe its time to end the lawlessness?
And sometimes ….talking doesnt work?
Maybe its time to realize that a select group of opportunistic people are using the protests to murder, loot , burn and steal?

Sorry if I ruined your “safe space”.

But if you disagree with a democracy “changing the rules” and doing as they please….

Send a message to our Prime Minister at his cottage where he has been handing out billions of dollars with zero debate, zero discussion, zero repercussions, while Parliament remains closed (proroged?).

If he deigns to answer your question perhaps you can ask him another question

If the situation in Canada were the same as the US…. Would he declare the War Measures Act in Canada to deal with looters, arsonists and murders like his father did 50 years ago……..?

#99 Colin Forth on 06.07.20 at 12:17 am

DELETED

#100 Black Lives Madder on 06.07.20 at 12:26 am

#10 Karla Germaine on 06.06.20 at 10:50 am

The WHO have refuted this Italian doctor’s claim.

——————————

That’s great news! Now we know his claim must be true.

#101 drydock on 06.07.20 at 12:35 am

#58 I’m Stupid.
That’s what happens when you re-elect a dangerous lunatic.
#59 Colin probably voted for him.

#102 Tim123 on 06.07.20 at 1:43 am

Nice post. I am anticipating a pullback in the markets in the short term but higher markets by the end of the year. It is a good environment for traders like myself to take advantage of the volatility. I suspect there will be some under employment over the next year or two as coronavirus will sap demand.
I think the over aggressive police have gotten away with things for too long but with the advent of cell phones with video cameras, they will have to tone down their violent behavior.

#103 Steve French on 06.07.20 at 4:02 am

Dear Ryan L/ Sir Garth:

G’day.

What do you think of this true Aussie legend?

“Investor with 200-plus properties bags six more homes during COVID-19 and wants even more”

https://www.realestate.com.au/news/investor-with-200plus-properties-bags-six-more-homes-during-covid19-and-wants-even-more/

– Steve O from Australia

#104 Yono Bradley on 06.07.20 at 6:58 am

DELETED

#105 David on 06.07.20 at 7:08 am

One of the challenges is the financial markets versus the main street economy. Jim Cramer said it well.

https://www.commondreams.org/news/2020/06/05/jim-cramer-coronavirus-pandemic-triggered-one-greatest-wealth-transfers-history

#106 Do we have all the facts on 06.07.20 at 8:22 am

#81 Westcdn

I find it interesting that Brookfield announced plans to spend $40 billion to buy back their stock over a number of years. This is more than 50% of their current market capitalization.

Brookfield stock was $10.35 on March 18, 2020 and closed at $15.25 on June 5, 2020. I would be interested to learn how many shares were repurchased by Brookfield over this period.

I wonder how many Canadian companies put their stock repurchase strategies on hold until current government support programs wind down. Asking for government aid while continuing to repurchase shares is a definite no no.

The theory behind quantitative easing was to stimulate capital investment in growth. In practice a significant percentage of increased liquidity in North America appears to have been used by companies to buy back shares. Perhaps it is time for the Government of Canada to introduce strategies designed to direct investment capital towards expansion of Canadian GDP.

Just a thought!!

#107 Gravy Train on 06.07.20 at 8:37 am

I think everyone can now agree that Trump is getting the best crowd sizes!

#108 TurnerNation on 06.07.20 at 8:44 am

What’s good for the markets, in this New System the corporations form the new global order and dictate everything:
– Online merchants will de-platform people, sellers, with ‘right wing’ causes or Trump Merch. (he’s an actor anyway. Ditto BOJO, T2, all theatre)
– Every step you take inside a store is ordered by a corporation: the door you enter, the direction you walk the aisles, the space and steps you take before stopping; where you stand; what you wear on your face. Taking your temperature at the door. No sickness is acceptable. Only healthy tax slaves are allowed in the door.

– Years ago I said social media was weaponized. People being fired over something they ‘liked’ or tweeted years ago. Guess what those big Tech companies have more dirt on you, more info than god about you. The A.I. never forgets and has been collecting this for years.

Which is why the day after the globalists locked down the world every corporate CEO sent you an email didn’t they, about ‘flatten the curve’. This week they all sent another round of emails judging skin colour. All following the same script.

– Want more proof? From twatter:


8h
Replying to

and

I am in Canada. I received a memo at work that we need to wear all black next week in solidarity with the BLM movement in US. WTF???

#109 David on 06.07.20 at 9:11 am

Some thoughts on the Canadian mortgage market.

https://wolfstreet.com/2020/06/01/head-of-canadas-mortgage-housing-agency-cmhc-warns-homebuyers-to-question-motives-of-those-saying-prices-will-rise/

#110 TurnerNation on 06.07.20 at 9:17 am

Ontario extends lockdown again. ..another 10 days. Smoking out all small businesses as per globalist orders. They see the credit crard usage data and mobile phone location data. They know how much further to tighten the screws.
In fact in early April media reported the Mayor of Toronto was looking at mobile phone location data.
It’s all right in front of you.

So they got us in the streets protesting the wrong thing! Brilliant distraction to this collective punishment transforming us into the New System.

Key point: the New System has all compassion removed from it. Try Visting your aging relative in a care home. Try it. You’ll be jailed.
We are in a new system, new religion. Kneeling.
Masks. New slogans.
New normal stay safe flatten surve trace contacts distancing
There’s way more they will unleash on us.
September is Harvest season. Hold on.

#111 Thanks Ryan OAS on 06.07.20 at 9:53 am

Thanks for answering my comment on OAS
You are logically correct.
Sometimes when we think (me) you have a thought and cannot get of that line.
My thought was the government has run a major deficit and I believe all things are on the table, to cut.
In reality this is a one time deficit ? So next fiscal back to $24 billion deficits.
Mind you we focus on the 300 billion, but it will just be added to the Debt and to be honest I don’t think governments care about debt anymore. And in all honesty I don’t think the majority of Canadians, if according to the stats, care about their own debt So why bother worrying about the government.

#112 what the heck on 06.07.20 at 10:01 am

#95 Stone on 06.06.20 at 9:20 pm
______________________________________

just open up a Questrade or Wealthsimple account. they do all that for you, for extremely low fees.

#113 Ryan Lewenza on 06.07.20 at 10:02 am

Lobster Man “Ryan, Thank you for a very good post. Now, I have a question.

To every buyer there is a seller. So when the Fed dishes out 2 trillion dollars to buy treasury and corporate bonds, the sellers would receive the corresponding funds. What do they do with those funds? Of course, these sellers would acquire new assets, which presumably would provide a superior yield/return than the stuff they just sold, namely they will dive into the general equity markets etc.

In general, we all understand that higher yield means higher risk. Therefore, my question to you is: Do you think this is a stable situation, for the longer term, particularly if the longer treasury yields start to rise (yield curve stifling)? Thank you, LM”

I don’t have a particular issue with the Fed adding stimulus during downturns. This has been happening for decades where the Fed and and other central banks lower interest rates to help spur the economy and push investors to move from lower risk bonds to higher risk equities. My concern with these new QE policies is all the debt that is created and leftover once the recovery inevitably unfolds. The US debt has more than doubled from Bush II to Trump’s presidency and it’s only going to increase after this round of stimulus. So this is the key risk of all this stimulus, and what sometimes keeps me up at night. But I guess we’ll deal with this over the next decade. – Ryan L

#114 technical analysis? on 06.07.20 at 10:06 am

im curious why RYAN didn’t ring the alarm bells when the markets collapsed and broke their 200 day MA’s, and instead advised people that it was a good BUYING opportunity? but now, that the market has closed ABOVE, he’s “constructive” ?

live by the sword, die by the sword… you can’t have it both way Ryan.

#115 Stimulus on 06.07.20 at 10:06 am

#Sydneysider

Your wife has already missed the bus. Cash is worthless. It is earning close to 0%. On the other hand, the stock market has increased 50% in the last 3 months and it is on track to hit all time high in a few weeks.

#116 belly rubs on 06.07.20 at 10:10 am

I am expecting an “h” recovery, not a subsidized “v”. Unless the “v” goes “y”. A “w” seemed possible, even a “u”, but too many indicators have gone “z”. Thankfully, we didn’t go little “L”.

Keeping an eye on Baltic dry.

#117 crowdedelevatorfartz on 06.07.20 at 10:30 am

hmmm,
Quebec company announces 2500 layoffs.
Quebec company major Liberal campaign contributor.
Liberal govt immediately announces major purchase.
Trudeau and his ministers get 2 more shiny new executive jets.
The “Earth First” Liberal agenda will have to take a back seat on these 9 passenger, $55 million dollar executive class polluters…..

https://nationalpost.com/news/canada/feds-sign-105-million-deal-with-bombardier-for-two-new-challenger-jets

“sigh”
Governing is such a Challenge’r but at least I dont have to fly with the rabble.

#118 Hack Writer Billingsly on 06.07.20 at 11:04 am

DELETED

#119 Waves incoming..... on 06.07.20 at 11:20 am

The second waves are just winding up….

https://twitter.com/V2019N/status/1269021276477128704?s=19

Do we have another 10 trillion $$……

#120 Lobster Man on 06.07.20 at 2:46 pm

#113 Ryan Lewenza,

Thank you very much for your reply.

There are 3 major US Treasury auctions coming up this week. It will be interesting to watch the response.

LM

#121 TrendIsYourFriend on 06.07.20 at 4:19 pm

#114
Ryan doesn’t seem to use Technical Analysis to “predict” what’s market going to do. Which is correct and responsible approach. Those that use TA to predict, one day will pay the price. TA is a risk management tool, not crystal ball. Game of probabilities my friend.
The same reason he is now expressing caution.

#122 the Awakened One on 06.07.20 at 5:02 pm

Thank you, Ryan!

I’ve learned a new, useful concept – the ISM index.

Stay safe, write more (spill more secret trade-crafts out for us, the non-Porsche drivers! )

#123 Andrew MacNeil on 06.07.20 at 9:23 pm

#70

Ok General Lee. You lost your war 170 years ago. And this is a Candian blog, why are you posting about your 5th ammendment rights and crop like that, pretending to be American? Surely there are plenty of right wing American blogs you can contribute to?

#124 Steve B on 06.08.20 at 9:47 am

Garth, is there a reason you would let a racist like crowdedelevatorfartz continue to comment on your blog? This does not reflect well on you, Ryan or the blog, and indirectly, your business.

Ryan, these are not race riots, please choose your words more carefully. This is people expressing their opposition to systemic racism and asking for equality.

#125 YVR Expat on 06.08.20 at 1:27 pm

#23 Frugal Xennial on 06.06.20 at 12:10 pm
Choose language carefully. Instead of “worst race riots” since the 1960s try something like “most powerful civil rights movement” since the 1960s.
******************

Rioting and looting have nothing to do with the “most powerful civil rights movement” of the 1960s