What it means

On Wednesday the Bank of Canada won’t raise rates. But it will set the scene for an increase. That comes in 2022. Maybe next month, some believe. More likely April, others say. The tightening cycle, most agree, will contain six to eight bumps over maybe 20 or 24 months. What is now 0.25% will end up being closer to 2.50%.

Here’s what it means.

For investors, stocks will react negatively to higher rates. They always do. But they always get over it. Already the markets have absorbed the end of our CB’s bond-buying blitz as well as the news the Fed will soon start to taper.

Higher rates come because of inflation, which results from an economy growing so fast that demand outstrips supply. Look at the jobs numbers. We created over 150,000 new positions last month and still the business community is screaming for help. This is the essence of inflation, now approaching 5% for the first time since I could do one-handed pushups with Dorothy on my back (ask her).

In short, stocks feed on growth and expansion and profits. Higher rates are just the price to be paid for that. Markets are look headed for new record highs in 2022, regardless of what the CB does.

For investors with B&D portfolios (the correct kind) higher rates are no issue. Having a healthy weighting of rate reset preferreds mean a benefit when the cost of money rises, since it increases their capital value. Plus you get a 4% dividend. Plus a tax credit. Also ensure you have some floating-rate bonds in an ETF, as well as corporates. Don’t buy VBAL or another fund with an overweight govy bond position or misery will ensue.

For borrowers, not good. Five-year mortgages have already surged far above the 1.5% available from brokers last summer. There’s more to come. Variable-rate mortgages have historically saved borrowers money, but they will tick higher with every central bank increase. If you want stability, lock in.

Ditto for LOCs. Most lines of credit, secured by real estate or not, are variable-rate demand loans tied to the chartered bank prime rate. Prime will increase over time as the Bank of Canada moves, and could be close to 4.5% by this time in 2023. That is a huge move. On a $250,000 line interest-only payments almost double. If you borrowed to invest,  payments are deductible from taxable income. If you borrowed to reno the kitchen, well, sorry.

For savers, finally, some relief. Sort of. GIC and HISA rates will increase along with the prime, But this means guaranteed investment certificates will top out around 4% – a huge jump, but not enough to preserve purchasing power. Inflation will still nibble away at returns in a registered account and together with tax will decimate them in a non-reg situation.

For real estate, well, it’s complicated. The mortgage rate increase experienced this autumn (caused by bond market anticipation of CB moves) has already lit a fire under prospective buyers, advanced their purchasing decisions, drawn demand from the future, and given us the highest number of sales in November history.

The question is what 2022 will bring when the cheapo pre-approvals have expired and people are borrowing home loans at 3-4%. Will the market wobble and prices deflate? After all, we know all about the inverse relationship between rates and house values.

The answer depends on inventory. These days there are more buyers than houses and with the feds about to goose demand with more incentives and easier rules, conditions are unlikely to change. Once the CB starts to tighten, expect another flurry of desperate offers, then a period of consolidation. If owners start becoming sellers in the second half of 2022, cashing in their windfall gains, the chemistry will change. More supply at a time of rising finance charges will change everything.

Finally, consider this: rates will rise. They must rise. There is no other effective counter to inflation nor swelling asset values, both of which destroy the value of currency. If there is political interference from a profligate, irresponsible, debt-embracing and spendy federal government attempting to bend monetary policy, watch out.

In the next economic downturn, without tightening now, there would be no quick lever to pull in order to save us. No ability to drop rates. No way of unleashing credit to counter recession, or worse.

Then we’d be discussing off-grid cabins in NB, with cord wood and moose meat. Say, have yours yet?

About the picture: “If Cats are good to go on the blog, I feel compelled to submit Charlie, our resident serial killer,” writes the blogger known as IHCTD9. “He keeps the old farmhouse free and clear of any unwelcome furry guests. You can tell he’s all business, but still – he’s a good boss. Charlie maintains high expectations of his staff, but still melts into a puddle with a little chin scratch. You can’t keep him away from an empty cardboard box, or a pile of Christmas wrapping paper. He enjoys snacking on a wide variety of delicacies ranging from apple-pie and ice cream, to pulled pork, and Zesty Doritos. As a stray, he chose us 12 years ago, expertly working his way into the house, and into our lives. I’m glad he did.”

130 comments ↓

#1 cuke and tomato picker on 12.07.21 at 3:14 pm

Low borrowing rates have allowed some people to get in to over their heads. From what I see some have large
house payments, car payments, home renovation payments, as well as credit card debt. So when interest
rates go up there will be consequences. Hopefully too few to impact the overall economy.

#2 Dolce Vita on 12.07.21 at 3:14 pm

Well, Mr. Market got over the Fed lowering stimulus earlier than planned and bad Omicron news…

DJI, 2111 hr CET:

+527.34 Today
+988.77 past 5 days, +2.83%

Nice asset class.

#3 Dogman01 on 12.07.21 at 3:17 pm

From the BMO suggestions: Canadian Housing Fire Needs a Response

“Help affordability: The reality is that such measures do very little, and often just get built into prices or strengthen demand, and are therefore counterproductive. Also, borrowing from assets only puts households further behind on their retirement/other savings.”

https://economics.bmo.com/en/publications/detail/c76a7448-4306-4a50-a335-3a7c98fcbe9e/

This is how you know how stupid the Liberals know the majority of Canadians are, the LPC promise this type of response, but they are smart enough to know it will do nothing but increase prices. They realize that most Canadians will think they are being helped. Our leaders are not interested in solutions that may make the country better, they are interested only in solutions that the masses perceive are good. Maintaining power is the goal, choosing to make Canada a better place or make it worse depends on which outcome meets their goal.

Cattle Farmers get to know how stupid cows really are, the farmers of Canadians realize this also…

#4 Dolce Vita on 12.07.21 at 3:34 pm

Europa Slimy Pathogen BAD NEWS

—-

Denmark, World Champ at Covid Surveillance * had this to say today:

“Omikron has run away from us”

A single sentence from the press conference fits very well with what Denmark and the REST OF THE WORLD have been affected by:

“We are up to having a virus that is potentially as contagious as measles [Omicron]”

* Denmark testing
https://i.imgur.com/tInXpC9.png

Denmark Nov. 8 and Today, Cases/100K
https://i.imgur.com/Uvm461R.png
https://i.imgur.com/0TcsI6v.png

Not for a lack of vaxing
https://i.imgur.com/squnfl3.png

Gene sequencing last 30 days, by number and %
https://i.imgur.com/TzRqCwD.png
https://i.imgur.com/mSwMmrm.png

—————-

Canada data here and there. Draw your own conclusions.

I see Omicron becoming “Deaths by a 1,000 cuts.”

Another Winter of Discontent.

—————-

PS:

Spain, we value our tourism €’s above all else (and have the cheapest Europa beer prices):

“Nearly 70 Spanish medics Covid positive after Christmas party”

https://www.bbc.com/news/world-europe-59561876

They were actually 68 ICU Doctors + Nurses at a party of 153 according to El Pais.

The English, as usual, downplaying their favorite cheap beer destination.

…told you so.

#5 Lumber on 12.07.21 at 3:38 pm

I think rental prices will also help moderate real estate values. As long as it’s cheaper to own than rent, folks will find a way.

#6 In Dog We Trust on 12.07.21 at 3:38 pm

Well,,, there are others that counter inflation,,, loss of job prospects… Both automation and off-shoring are these… Others exist in self-driving vehicles and whatever else the future is throwing at us…

#7 JR on 12.07.21 at 3:38 pm

Buy Bitcoin, it doesn’t care about any of this.

#8 IHCTD9 on 12.07.21 at 3:42 pm

Then we’d be discussing off-grid cabins in NB, with cord wood and moose meat.
_____

Seems we discuss these quite a bit already down here…

Thanks for showing off Charlie, he’s a good kitty.

#9 Caffeine Monkey on 12.07.21 at 3:43 pm

Garth, we all know that over-leveraged homeowners are going to be in trouble when the you-know-what hits the fan. How do things look for corporate balance sheets? Certainly many companies have taken advantage of cheap money, just as homeowners have. Oil companies are famously indebted. For Canadian corporations, what does the risk of rising interest rates look like short, medium and long term?

#10 earthboundmisfit on 12.07.21 at 3:44 pm

Dude … most cats are lactose intolerant. Ixnay on the ice cream.

#11 Dan on 12.07.21 at 3:46 pm

Garth, what is going on? The world is ending! This is the second cat picture on your blog!

#12 SunShowers on 12.07.21 at 3:49 pm

“In the next economic downturn, without tightening now, there would be no quick lever to pull in order to save us. No ability to drop rates. No way of unleashing credit to counter recession, or worse.”

Except for negative interest rates.

#13 Yukon Elvis on 12.07.21 at 3:51 pm

Some Bay Street economists believe the Bank of Canada can likely wait a little longer to raise its benchmark interest rate, despite inflation running well above the central bank’s target and the risk that poses to household spending.

“If you believe most of the increase in inflation is temporary, then [the Bank of Canada] likely can wait a bit longer,” Sal Guatieri, senior economist and director at BMO Capital Markets, said in an interview.

https://www.bnnbloomberg.ca/bank-of-canada-can-hold-off-on-rate-hikes-despite-risks-economists-1.1692219

#14 Felix on 12.07.21 at 3:51 pm

Feline Groovy!

#15 Felix on 12.07.21 at 3:53 pm

Feline Groovy!

https://www.youtube.com/watch?v=So0ZrTwf8vI

#16 Mr Fox on 12.07.21 at 3:54 pm

Tony Stillo and Michale Davenport said “Our analysis suggests households are well positioned for the gradual rise in interest rates that we anticipate in the coming years. However if rates were to rise sooner and more rapidly, higher debt service costs could materially constrain consumption, causing a broader slowdown in the ECONOMY” (not just housing, but economy).

Also they said:
“If the BoC raises its policy rate from 0.25% in the fourth quarter of 2022 to its “neutral” level of 2% by mid-2026(!!!), household interest payments is forecast to rise as a share of disposable income from a record low of 6.3% in the third quarter of 2021 to 8.2% by the fourth quarter of 2023. We estimate this would add $86 to the average monthly mortgage payment by Q4 2023, and $236 by Q4 2026″
you can see more here: https://financialpost.com/executive/posthaste-canadians-embarked-on-a-193b-mortgage-binge-during-the-pandemic-now-comes-the-reckoning

Now, who still thinks that $86 more monthly will “bring the housing prices down”, or that in $236 more per month in 2026 will have any impact on the prices?

This video should give you a better insight why the houses go up in price in some cities (Berlin, Vancouver, Dublin) and stay stagnant in other places like Tokio.
https://www.youtube.com/watch?v=3UAdGuscwqk

It’s all about migration. Demand and supply. Good luck everyone.

#17 Millennial on 12.07.21 at 3:55 pm

“That comes in 2002.”
LOL.

#18 Dolce Vita on 12.07.21 at 4:03 pm

Prior Comment forgot to mention and why I did a Cases/100K snapshot of Denmark on Nov. 8 as I saw them beginning to worsen *:

“COVID-19 no longer categorised as a critical threat to society”
10-09-2021

https://sum.dk/nyheder/2021/september/covid-19-no-longer-categorised-as-a-critical-threat-to-society

[This means that restrictions related to this categorisation expires.]

For those that think Canada is going to vax it’s way out of the Pandemic think again OR it really is true that Canadians are the modern day “Norse Gods of Valhalla chosen by Divine Manifest Destiny”.

Self-Verify:

Channel Mother Nature and ask her if she knows anything about Thor and Loki and what they’re ‘sayin?

———————

* To be honest I was really hoping they would pull it off and give the rest of us HOPE.

Alas…

My Threadbare Portfolio speaking here:

“Sshhh, don’t tell the Americans. DJI doing nicely the past few days and thanks.”

#19 Ron Gee on 12.07.21 at 4:06 pm

There is no way rates are going to 2.5 in 2 years, never going to happen.

Don’t you remember when Tiff said rates will be low until 2023? you just can’t trust the CB.

#20 TurnerNation on 12.07.21 at 4:07 pm

#74 Diversified in Mississauga on 12.06.21 at 8:48 pm
*soothes* there there. We’ve arranged for a nice padded Safe Room you can rage in, CBC news will be played 24/7.

–Permanent rolling Economic lockdowns…Ontario’s Reopening Act = Closing act. 180 deg. Surprised yet?

.Ontario extends pause on reopening plan indefinitely as COVID-19 situation worsens (toronto.ctvnews.ca)


— War on Middle Class circa March 2020. Your Hint was when the “Minister of Middle Class Prosperity” was announced by T2. Sheer mockery. Flip it 180 degrees to make sense. Interest rate hikes will be the next salvo in this global WW3.


– The War on Small business, also unleashed March 2020 continues. I’d said that “Distancing” is the greatest economic weapon unleashed. Almost 2 years later and still going. New rules upon Rules – for 2022

https://www.iheartradio.ca/am800/news/windsor-essex-restaurant-owner-devastated-over-new-restrictions-1.16641255
“A Windsor-Essex bar and restaurant owner says he’s ‘angry and devastated’ over the last COVID-19 restrictions announced by the Windsor-Essex County Health Unit.
Matt Komsa says December is the month that gets them through the cold January, February and March of next year and he’s not sure what to do…


We pay high taxes also for government Prisons! Now understaffed and potentially unsafe for all involved.

.120 Unvaccinated staff at Milton correctional facility put on unpaid leave following Section 22 order (toronto.ctvnews.ca)

#21 Billy Buoy on 12.07.21 at 4:07 pm

The Central Banks have 2 choices:

1. Raise rates and allow the stock market to fall.

2. Not raise rates, let inflation run wild.

I take # 1. Why? Higher rates allow for even greater bank profits, the banks are covered if housing tumbles, and banks are covered by us the tax payers if they get in trouble.

Will stock markets regain these bubbly heights?

Unlikely for a long time as once supply issues are taken care of (The growth hasn’t been organic – look at the record stock buy backs by companies which END for the year this FRIDAY), over debt consumers and poor demographics.

#22 CJohnC on 12.07.21 at 4:11 pm

#11 Dan
Garth drank the woke koolaid regarding pictures. It’s all inclusivity now.

#8 IHCTD9
nice cat. I had his twin back n the late 70’s under the same circumstances (stray, great mouser)

#23 ogdoad on 12.07.21 at 4:15 pm

Great blog post, Garth! Will things be back to normal enough to see these predictions come to fruition or will other unforeseeables stand in the way? Well, unforeseeable in my mind.

Floods, fires (btw, moving to some places in BC with my fam. has slid to last place), super cells, those river thingies, heat domes and polar vortexes, mass human migration, Putin (sorry if you get hacked), COVID, something else for dissing the Olympics?

Phew….what a world! So happy we can plug in every night and not think about it. I shutter at the thought of millions of first worlders being bored…

Og

#24 Faron on 12.07.21 at 4:21 pm

Love me a marmalade cat. Not sure if markings go with personality, but ours were fierce hunters but had cuddly personalities like Charlie’s.

Seems like equities cleared some gunk out of the jets for another leg higher (prob crash tomorrow, LOL). Lots of index components down into the gutter. Bonds had a moment in the sun because of it.

Rates up, equities up. Probably a good time to invest in corps that actually turn a profit. Massive, positive cashflow will be the only antidote to higher borrowing costs as rates resume their grind higher. Lots of stuff in the TSX, but mega cap US tech probably will hold up. Just google up what comprises ARKK and suchlike and that’s your list of flaky garbage to avoid.

Speaking of flaky garbage…

#7 JR on 12.07.21 at 3:38 pm

Buy Bitcoin, it doesn’t care about any of this.

LOL. It sure cared about something when it crashed from $69.0K (was that a joke?) to $42.3K — a 38% plummet — last couple weeks. Also this year was a completely separate, wee 60% dip.

That said, as long as the likes of Bitcoin and Tesla are alive and kicking with people eagerly B’ingTEffin’D, there’s still gunk in the jets to be cleaned. Everyone knows this which is why VIX spiked massively on a mere 5% dip. When she goes, she gonna go big. Unfortunately, if everyone knows this the going reflexively has to happen faster than the dip can be bought.

#25 Kirk on 12.07.21 at 4:21 pm

Your best buddy, Rosernberg, says NO WAY to all those rate hikes.

The perennial bear isn’t alone. BNN (which I don’t watch) showcased some economists who believe the BoC can hold off on hikes. These goofs still believe inflation is “transitory”.

#26 Joe on 12.07.21 at 4:22 pm

Haha – raising rates. Haha! Right.

#27 Classical Liberal Millennial on 12.07.21 at 4:23 pm

DELETED

#28 Dolce Vita on 12.07.21 at 4:32 pm

BoC between a rock and a hard spot.

Raise rates now substantially, have ammunition later on to boost economy

vs.

Raise rates slowly, token increases, see what happens.

Raise rates large and fast and Gov’s Canada will spend more on interest than on the people. Anyone needing a loan will be poorer.

Raise in iota increments and slowly to see what happens probably the more sensible choice. Gov’s have more money to spend on the people and loan rates kept low continuing to stimulate the economy.

BoC prudent. I agree with them for now.

I recall in the ’80s doing cash flow projections for then one of the largest companies in the World (Mergers & Acquisitions stuff) using a 5% Inflation Rate per Year on Revenue projections compounding for 5 years as:

De rigueur.

Canada is not there yet.

#29 OK, Doomer on 12.07.21 at 4:33 pm

“If there is political interference from a profligate, irresponsible, debt-embracing and spendy federal government attempting to bend monetary policy, watch out.” -Garth
++++++++++++++++++++++++++++++++++

If? We have a government without adult supervision.

My expectation is for them to exhaust every possible blunder before settling on self-immolation.

#30 TurnerNation on 12.07.21 at 4:34 pm

This is sounding PERMANENT. Not only here but globally. Like a global reset – a big Consp. theory! What’s a guarantee is that NO new hospital capacity will be added. That would be silly.

https://www.blacklocks.ca/this-will-go-on-for-months-possibly-even-years-cabinet/
“Pandemic health precautions may last “months, possibly even years,” warns Health Minister Jean-Yves Duclos. His remarks to reporters followed questions over whether Duclos’ department will now redefine full vaccination to include a third Covid shot for millions of people: “May Canadians be expected to get a shot every six months consistently going forward?””


— Latest Science in Kanada:

https://www.blacklocks.ca/no-moderna-for-young-men/
“Young men and boys aged 12 to 29 should no longer take a Moderna shot after millions of doses were already administered, says a federal panel. The National Advisory Committee on Immunization cited a rare but troubling incidence of heart inflammation: “Pfizer-BioNtech is preferred to Moderna.””

— You got your jab now it’s Back to Normal! 20 is the magic number. Absolutely 20.

.Quebec: Beginning December 23, private gatherings may have up to 20 people vaccinated. (tvanouvelles.ca)


– Everything is upside down in the New System. As I noted here, in Sept 2020:

#175 TurnerNation on 09.09.20 at 10:13 am
“Remember this: you no longer have the right to be sick; conversely you no longer have a method of proving your health.”

#31 Pandemic Is Over on 12.07.21 at 4:48 pm

rates will rise. They must rise. There is no other effective counter to inflation nor swelling asset values – Garth

Well, effective or not, but there is another way: fiscal policies. And MMT (Modern Monetary Theory) finds it more preferable than monetary. Raise the taxes to “vacuum” the excess money from the economy.

Therefore, taxes will increase for the average Conservative’s voter… because it’s Libs-NDP tandem who will design the policies.

#32 Griffith on 12.07.21 at 4:50 pm

Garth:

“my 60/40 portfolio is better than Vanguard’s.”

Lol k. What do they know with their 7.1 trillion USD in AUM.

Vanguard has some great ETFs. But that’s not one of them. – Garth

#33 Prince Polo on 12.07.21 at 4:54 pm

Garth man – u feeling okay? Lotsa cat photos lately….maybe Felix sent a cease and desist letter?

#34 Bob in Hamilton on 12.07.21 at 4:58 pm

Personally, I prefer the babes you used to post as your daily blog photo….sigh.

#35 zxcvbnm on 12.07.21 at 4:59 pm

Dolce Vita stop spamming. 4 out of 28 comments is too many. And they’re useless stupid comments to boot.

#36 Nonplused on 12.07.21 at 5:02 pm

“Higher rates come because of inflation, which results from an economy growing so fast that demand outstrips supply.”

Then why did we get inflation in the middle of the covid recession? Oh ya, the government started handing out CERB and everything else they could think of using borrowed money.

I don’t buy that economic growth causes inflation. Inflation occurs when the supply of money runs ahead of the natural demand. The central bank can always cause inflation by keeping rates too low, and stop it by raising rates.

It just doesn’t make sense that a growing economy, which is producing more widgets, should necessarily see the price of those widgets rise. They just sell more. Some price inflation may occur but that sends a signal to producers to up production. But offer zero percent money and suddenly everything can be financed.

Either way I think we agree that the current inflation levels, if they persist, must be met with higher rates. 6% inflation is in the range of “unmanageable”. People need something like 8% annual wage increases to keep up with it because of taxes. It is unsustainable. Those who used leverage to buy assets see their M2M skyrocket, but the average person can’t afford bus fare anymore.

#37 Faron on 12.07.21 at 5:07 pm

You know how apiarists tour their honey bees around to pollinate blooming crops throughout spring in North America? I wonder if the same could be done with a herd of cats to eradicate rodent problems wherever they spring up. It wouldn’t not be interesting… Professional cat herder.

Like Garth overseeing steerage.

Except paid.

#38 Big Bucks on 12.07.21 at 5:11 pm

Japan has had negative or near negative interest rates for years(decades even)What do they do in an economic downturn when rates can’t go lower?I guess they just go further negative?I just don’t think Canada will raise rates so they have some ammo for the next downturn.It looks to me at this point that they know inflation is a possibility but aren’t really worried about it as deflation was all the rage just 9 months ago.Rates will go a little higher and there is always the risk of inflation taking off but not many are seeing that are they?Inflation is a clever way to tax the 42% who presently pay zero income tax and it also may be beneficial for the climate(people consume less junk).The real wild card is all the hoopla about going green which may be even more inflationary than all the runaway debt.We’ll have a better reading by this time next year but I don’t expect to see much difference than where we are now.

#39 Charles Atlas on 12.07.21 at 5:11 pm

This is the essence of inflation, now approaching 5% for the first time since I could do one-handed pushups with Dorothy on my back (ask her).

* * *

Well, you know, Garth. Women do tend to gain weight when they get older … whereas rugged, hairy-chested he-men like yourself stay fit and ripped.

Just don’t let her see what you wrote!

#40 Doug t on 12.07.21 at 5:14 pm

Call it what you want – Great Reset, Correction, Collapse – it’s coming and it will crush some folks

#41 NOSTRADAMUS on 12.07.21 at 5:19 pm

BOXED IN, DAMNED IF I DO, DAMNED IF I DON’T.
Round and round we go, with no way out. Why, oh why, are House prices continuing to rise? First the usual suspects, constrained supply, not enough social housing, nimbyism, profiteering housebuilders, too much immigration, oppressive planning controls, absentee foreign buyers, and so on. Yet beneath it all lies a far simpler explanation- easy money. As with other asset prices, it is above all ultra-low interest rates that have been the driving force behind ever higher prices. The solution is a two edged sword. It is usual to argue that interest rates are a particularly blunt, even inappropriate, tool with which to fight overheating house prices. They might indeed do the trick, but they could cause a lot of unwanted collateral damage to business and consumption. Perhaps, better to ration credit. But better still not to create so much credit in the first place. It is hard to see any other alternative, immediately available way out of this mess other than to make it more expensive .Amen Brother

#42 Marc Roger on 12.07.21 at 5:21 pm

Thanks for pointing out the amount of govt bonds in balanced funds.

https://www.bmo.com/gam/ca/advisor/products/etfs?fundUrl=/fundProfile/ZBAL!hash!holdings#fundUrl=%2FfundProfile%2FZBAL%23holdings

#43 Kevin on 12.07.21 at 5:27 pm

“That comes in 2002.” small typo, Garth.

Also, what shall the personal investor buy instead of VBAL?

#44 yorkville renter on 12.07.21 at 5:27 pm

Can mortgage interest be deducted if used to buy securities, or does that only count for a LOC?

Yes. – Garth

#45 IHCTD9 on 12.07.21 at 5:35 pm

#31 Pandemic Is Over on 12.07.21 at 4:48 pm
rates will rise. They must rise. There is no other effective counter to inflation nor swelling asset values – Garth

Well, effective or not, but there is another way: fiscal policies. And MMT (Modern Monetary Theory) finds it more preferable than monetary. Raise the taxes to “vacuum” the excess money from the economy.

Therefore, taxes will increase for the average Conservative’s voter… because it’s Libs-NDP tandem who will design the policies.
———-

Going along with this narrative…

Crusty OSC knuckle dragging Cons already own a home (or two), and are 10 years or less from retirement. Taxing the excess out of the system will snare everyone of any age, who is gainfully employed. The debt accumulated by Trudeau will take a generation to stabilize – that means the Mils and Z’s are on the hook. There just aren’t enough liquid millionaires in Canada to foot the bill. Not even close.

#46 Linda on 12.07.21 at 5:37 pm

Charlie looks very regal:) Never fails to amaze me what pets might like. We had one cat who enjoyed spicy chili.

Even if the CB raises rates, the gas about to be thrown onto the RE fire from FTSA & other government incentives to make purchasing easier easily outweighs the effect of higher rates. Unless of course they increase well above expected levels. The extreme debt gamble that so many have indulged in would surely turn sour if mortgage rates were in the 8% range. No way? Well the current rates of inflation were unthinkable just a short while ago. Who knows where this merry go round will stop?

#47 willworkforpickles on 12.07.21 at 5:49 pm

Stocks have never in history performed well under rising inflation for long.
The Fed itself has been passing off distorted low inflation numbers to keep the market gas bag filled with hot air for a long time/long enough.
Rising interest rates do slow expansion in times of increased economic growth …but with the stronger economy, more consumers usually seek loans helping banks as they benefit from the difference between the interest they charge investors for the loan and the amount they earn by investing that money.
Banks win either way no matter what.
Rising interest rates generate wealth for those with money to invest also. The cash rich. Not the house poor or the house poor wannabe.
There are currently a great deal of would-be investors sitting on cash waiting for the pendulum on interest rates to swing back in their favour than can be ignored.
Times for rising interest rates moving higher generating new wealth away from the gasbag RE market that’s just about seen its day are on the rise.
The house poor and wannabe house poor will be finding themselves turning to the cash rich to fund their ghastly over-priced extravagances more and more as rates creep higher and they fail to meet ever lowering qualifying bank standards.
Time to make some money all you cash rich birds of prey funding and holding primo first mortgages for others again at elevated rates.
Bring it on…can’t wait.
…but remember to be mindful of the risk of dropping RE equity values before committing to any contract.
With that in mind push the rate even higher on the deceived wannabe for life house poor suckers before signing.

#48 Ron on 12.07.21 at 5:52 pm

Garth,

Please consider a post on VBAL. You have dissed the fund a couple of times, and I’m not sure why. It’s a 60/40 fund, which you profess, and it’s a big part of my portfolio. A personal note would be welcomed, if that’s more appropriate. Follower since inception…thanks for the dedication and service.

Ron

I never recommended that ETF. Far too bond-heavy. – Garth

#49 willworkforpickles on 12.07.21 at 6:08 pm

Correction to my last post…. “as rates creep higher and they fail to meet ever lowering qualifying bank standards.”……….
………………
I meant to say….ever more difficult qualifying bank standards.

#50 CJohnC on 12.07.21 at 6:08 pm

#34 zxcvbnm….
“Dolce Vita stop spamming. 4 out of 28 comments is too many. “

Whoa….when did it become your blog and comments section?

So far the only useless stupid comment I have found is yours

#51 Nonplused on 12.07.21 at 6:09 pm

#45 IHCTD9 on 12.07.21 at 5:35 pm
#31 Pandemic Is Over on 12.07.21 at 4:48 pm

rates will rise. They must rise. There is no other effective counter to inflation nor swelling asset values – Garth

Well, effective or not, but there is another way: fiscal policies. And MMT (Modern Monetary Theory) finds it more preferable than monetary. Raise the taxes to “vacuum” the excess money from the economy.

Therefore, taxes will increase for the average Conservative’s voter… because it’s Libs-NDP tandem who will design the policies.
———-

Going along with this narrative…

Crusty OSC knuckle dragging Cons already own a home (or two), and are 10 years or less from retirement. Taxing the excess out of the system will snare everyone of any age, who is gainfully employed. The debt accumulated by Trudeau will take a generation to stabilize – that means the Mils and Z’s are on the hook. There just aren’t enough liquid millionaires in Canada to foot the bill. Not even close.

————————————–

Taxes cannot be used to hover up excess money. The reason is fairly straight forward: The government spends it. All MMT tax theory does is change who has the money to spend, it neither controls the excess printing nor controls inflation. It is a childish dream, that you could somehow just print money and it would be as good as gold. Nope. It takes a lot of careful management to keep the money valuable.

#52 Faron on 12.07.21 at 6:19 pm

#35 zxcvbnm on 12.07.21 at 4:59 pm

Hey bottom row, it’s really awesome when people spam the comments section to tell other people to stop spamming the comments section. Bit like driving an SUV to the anti-pipeline rally.

#53 Dr V on 12.07.21 at 6:19 pm

Charlie is a handsome boy!

#54 Wait There on 12.07.21 at 6:42 pm

It’s different this time. Or is it?
I’ve heard this story before.
Signal to rise, as soon as there is some economic softness, the pants lose the belt and tightening is gone instantly

#55 Nonplused on 12.07.21 at 6:46 pm

#37 Faron on 12.07.21 at 5:07 pm
You know how apiarists tour their honey bees around to pollinate blooming crops throughout spring in North America? I wonder if the same could be done with a herd of cats to eradicate rodent problems wherever they spring up. It wouldn’t not be interesting… Professional cat herder.

Like Garth overseeing steerage.

Except paid.

————————————

Nope. Bees come back to the hive at dusk, making them easy to close in and move.

Cats on the other hand come back when they feel like it, and if the mousing is good that could be never.

Everyone is going to have to get their own cat.

#56 Drinking on 12.07.21 at 6:48 pm

What’s wrong with off the grid Cabin and Moose meat? Only good for a few. Get the masses going and there will be no woods or Moose. These are interesting times, horrible politics and greed have led us to all this. There will be no stability in the future until people wise up!

#57 AM in MN on 12.07.21 at 6:54 pm

Higher rates come because of inflation, which results from an economy growing so fast that demand outstrips supply.

————————————————-

Nonsense!

Inflation comes from central bank money printing.

Also, being at zero rates doesn’t leave the central banks without tools next time, they just print more and pump it into private markets, like mortgage backed bonds or used car loans, whatever they want to buy.

#58 ValleyBoy on 12.07.21 at 6:54 pm

Raising rates is inflationary. Venuzula, turkey proves this. Businesses charge more to service there debt aka inflation.

#59 Sam on 12.07.21 at 7:10 pm

Politicians won’t raise taxes, cut spending or increase rates. Letting inflation run hot and doing nothing with monetary policy is their best option at the moment unless something forces them to change. People will demand higher wages, prices will increase and a devalued dollar will make existing government, business and consumer debts smaller.

#60 Drinking on 12.07.21 at 7:12 pm

#38 Big Bucks

Big difference, population in Japan is almost 126 million. Second largest, coldest country in the world (Canada) population roughly around 38 million. Hmm, just saying??

#61 willworkforpickles on 12.07.21 at 7:15 pm

“For investors, stocks will react negatively to higher rates. They always do. But they always get over it.”
……………………………………………….
It makes you wonder why since the market has always outperformed inflationary times in dis-inflationary times…or the pseudo low inflationary times spurred on by the Fed of late.
Higher rates ease inflation and is actually good for the markets.
Investors react negatively to higher rates only temporarily while taking time to digest the shift and hence,…”they always get over it” rings true always.

#62 Pandemic Is Over on 12.07.21 at 7:17 pm

#51 Nonplused on 12.07.21 at 6:09 pm

Taxes cannot be used to hover up excess money. The reason is fairly straight forward: The government spends it. All MMT tax theory does is change who has the money to spend, it neither controls the excess printing nor controls inflation. It is a childish dream, that you could somehow just print money and it would be as good as gold. Nope. It takes a lot of careful management to keep the money valuable.

————————————–

Well, in MMT’s view, the statement that “governments spends the taxes that it has collected” is no more valid. They postulate that the things are the other way around:
1) Government supplies (spends) as much money to the economy as deemed optimal (which is not the same as amount of the collected tax revenue)
2) Excess money (excess in the inflationary sense) is removed from the economy by fiscal and monetary instruments.

#63 crowdedelevatorfartz on 12.07.21 at 7:19 pm

@#37 Faron’s Feline Fantasy
” I wonder if the same could be done with a herd of cats to eradicate rodent problems wherever they spring up. ”

+++

Ever try and “make” a cat do something?
Anything?

#64 twofatcats on 12.07.21 at 7:25 pm

Dec 7 Today’s flipped ‘principal residences’

https://housesigma.com/web/en/map?lat=43.368801&lng=-79.748811&zoom=15&center=%7B%22lat%22%3A43.37315897635624,%22lng%22%3A-79.74881172180177%7D

https://housesigma.com/web/en/map?lat=43.368801&lng=-79.748811&zoom=15&center=%7B%22lat%22%3A43.37007059152279,%22lng%22%3A-79.74460601806642%7D

https://housesigma.com/web/en/map?lat=43.368801&lng=-79.748811&zoom=15.67&center=%7B%22lat%22%3A43.347319885269954,%22lng%22%3A-79.76171690707123%7D

#65 Katherine on 12.07.21 at 7:28 pm

That is one handsome kitty! Always love a story about a cat finding his/her family. Garth, I think with all these photos of cats, you will expand your number of blogdogs.

#66 Armpit on 12.07.21 at 7:31 pm

Would like a Dog but my lifestyle right now forbids me.

In May 2000, a scrawny feral kitten (I thought) started hanging around my place. The Pandemic became full blown by then. I called her Kitty Wilson (after Wilson in Castaway) and she kept me company during the lockdown.

Wilson was skinny because she was feeding 3 kittens who then joined her. Eventually I had the kittens adopted and Wilson needled/spayed.

I built Wilson an insulated home with an automatic feeder and water. She is quite the hunter resulting no unwelcome critters.

And yes… when I drive up the driveway, Wilson runs out to greet me and flip flops on the pavement when I come out of the garage.

For now, it’s the best I can have.

#67 Brad on 12.07.21 at 7:33 pm

Love the serial killer photo! :) Thanks for including both feline and canine pics!

#68 Quintilian on 12.07.21 at 7:38 pm

“[ Bank of Canada] will set the scene for an increase. The tightening cycle, most agree, will contain six to eight bumps over maybe 20 or 24 months.”

Unlikely to materialize into a sustainable trek.

If the BOC actually carried out the hollow threat, it would take some sizeable and rapid successive increases to contain the inflation that has been underreported for far too long.

It would also confirm their dereliction.

Expect no real pre-emptive action, past behaviour is predictive of future behaviour.

Eventually there will be a major shock, and then finally the reset.

#69 IHCTD9 on 12.07.21 at 7:41 pm

#51 Nonplused on 12.07.21 at 6:09 pm

Taxes cannot be used to hover up excess money. The reason is fairly straight forward: The government spends it. All MMT tax theory does is change who has the money to spend, it neither controls the excess printing nor controls inflation. It is a childish dream, that you could somehow just print money and it would be as good as gold. Nope. It takes a lot of careful management to keep the money valuable.
———

MMT is new on the scene, an un-tested theory. IMHO, it won’t work because once you give the money away, you lose control of it. Raise consumption taxes? Maybe they won’t spend, or maybe not do so via retail. Raise CG taxes? Maybe the gains will be realized after the next government takes power. The very idea that taxes directly translate into revenues is well debunked by now.

They give it away with the assumption they can simply tax it back out – I disagree. Totally unreliable. In all likelihood, the rich will avoid the brunt of it, the middle class won’t care, and the poor will take a front kick. Same as the old boss.

#70 IHCTD9 on 12.07.21 at 7:50 pm

#53 Dr V on 12.07.21 at 6:19 pm

Charlie is a handsome boy!
— –

Isn’t he though? He’s an orange cruise missile with a one track mind. So endearing!

#71 Bob Dog on 12.07.21 at 7:57 pm

DELETED

#72 Ponzius Pilatus on 12.07.21 at 7:58 pm

Just learned that the Flamingo Hotel, the Crown Jewel of Whalley in the Heart of Surrey, has been torn down.
In its place, they will build 3 high rises 33, 45 and 53 stories high.
And it will be called (you guessed it) The Flamingo Towers.
The first tower has been submitted for presale, and I’m sorry to say, all 375 units were sold out in one weekend.
The units range from 328! to 1500 sqf.
Prices from 350 k to 900 K.
No information on who the buyers are.
It’s part of the effort to gentrify the run down, crime infested area, that has plaqued Central Surrey for ages.

#73 DON on 12.07.21 at 8:04 pm

@IH

I have an old version of Charlie…doesn’t take no for an answer. Rescue cat.

The big dog is named Charlie.

#74 Fruit Vendor on 12.07.21 at 8:07 pm

Well, the sad news is that all the inflation has been created by poor federal fiscal policy and leaders elected because they promise what the masses are asking for, not what would be good for the country and economy at large. The fact is, big money did not like the economy limping along at 2.0%, which in my opinion would work just fine. Instead, we have the covid crisis, so to speak, all the free money being thrown around which of course speaks to inflation. Supply and demand, there was no problem until you stop supply, not that the goods are not being produced, we just can’t unload them. There is no shortage of truck-drivers, it is the protocol within the federal/provincial/municipal governance that is causing this issue. Bottom-line, this whole economic melee has been fabricated. All we need now is a war, and from what I read it may be pending. Good luck to all, this is not going to be fun.

#75 Russ on 12.07.21 at 8:09 pm

Faron on 12.07.21 at 5:07 pm

You know how apiarists tour their honey bees around to pollinate blooming crops throughout spring in North America? I wonder if the same could be done with a herd of cats to eradicate rodent problems wherever they spring up. It wouldn’t not be interesting… Professional cat herder.

Like Garth overseeing steerage.

Except paid.
——————————————–

Hi Faron

Herding cats can be done but mind the scratches.

https://vimeo.com/26828021

“There’s nothing like bringing 10,000 short-hairs in…”

Cheers, Russ

#76 Ponzius Pilatus on 12.07.21 at 8:11 pm

#35 zxcvbnm on 12.07.21 at 4:59 pm
Dolce Vita stop spamming. 4 out of 28 comments is too many. And they’re useless stupid comments to boot.
—————-
You’re not the first one to notice that.
A fake Italiano.

#77 crowdedelevatorfartz on 12.07.21 at 8:12 pm

@#55 Nonplused
“Everyone is going to have to get their own cat.”

++++

Just so long as they’re trained not to kill birds or kept indoors…

https://www.birds.cornell.edu/home/bring-birds-back/

#78 crowdedelevatorfartz on 12.07.21 at 8:16 pm

@#72 Ponzie’s Preventative Promises

“It’s part of the effort to gentrify the run down, crime infested area, that has plaqued Central Surrey for ages.”

+++++
Good luck with that.

I popped into the Home Depot just off King George and Scott rd yesterday for about 15 minutes to pick up some stuff for work…
The staff were great.
The crackheads lurking around the parking lot…..not so much.

#79 Garth's Son Drake on 12.07.21 at 8:19 pm

A BC credit union is advertising that Cash back mortgages are back to compliment your HELOC.

How Does it Work?

If you take a cashback mortgage at the time of renewal, all aspects of your mortgage renewal stay the same (amortization/loan amount) but you get 5% of your mortgage amount back in tax free cash, this is offset with a 1% premium charged to the rate.

With mortgage rates at an all time low, this means most likely no change to your current mortgage payment amount and get 5% of your mortgage back in TAX FREE cash!

This is a lot of cash given the leverage on most mortgages.

This big bonus looks like a good excuse to buy another house or a new oversized truck that I don’t need.

This is better than money mart. I could never get these advances as a renter.

Let the good times roll.

#80 leebow on 12.07.21 at 8:27 pm

#58 ValleyBoy

Ya. I also noticed that Tim Hortons causes cold weather by changing to those awful cups with spruces and caricature caribous (what a disrespectful way to depict an animal). That’s irresponsible behaviour and must stop immediately.

#81 mike from mtl on 12.07.21 at 8:28 pm

@IHCTD9

Charlie sounds like he has found the life as it were. Cats and felines in general whilst craving (limited) attention are never far removed from their mean, serial killer ways. Sounds like my first tabby, would eat everything human, could not eat cereal in peace I recall, not one since give a fig of what I’m eating.

Don’t hate on domestic dogs myself, just those abomination of clearly human influenced toys, yuck. Whether ‘domesticated’ or ‘livestock’, all deserve respect – they’re living things not objects.

#82 IHCTD9 on 12.07.21 at 8:38 pm

#37 Faron on 12.07.21 at 5:07 pm
You know how apiarists tour their honey bees around to pollinate blooming crops throughout spring in North America? I wonder if the same could be done with a herd of cats to eradicate rodent problems wherever they spring up. It wouldn’t not be interesting… Professional cat herder.

Like Garth overseeing steerage.

Except paid.
———

We had a little infestation of undesirable rodents move into a crawl space under our dining room last year. I removed one section of skirt board so the local barn cats could get in there. Problem solved in under 2 weeks.

Reality says no guarantee the cats would come back though. You’d have to have a lot of them to make up for the losses!

#83 Faron on 12.07.21 at 8:40 pm

#7 JR on 12.07.21 at 3:38 pm

Buy Bitcoin, it doesn’t care about any of this.

Also, why would you hold an “asset” outside of the purview of the SEC that regularly experiences manipulated stop sweeps? Makes any kind of risk management impossible.

On December 3rd at 9:24PM Pacific Time, the price of bitcoin sank 11.5% in 4 minutes and then reversed most, but not all, of that in the next four minutes. On the 19th of May, 2021 the price sank 25 % and then bounced back 43 % in the hours from midnight to 9AM Pacific.

#84 Concerned Citizen on 12.07.21 at 8:49 pm

Garth, you still seem to be under the impression the central banks will act to control inflation. May I remind the the Federal Reserve continues to buy tens of billions of assets a month in the face of 6% inflation.

While the official mandate is to control inflation, the actual mandate is clearly something different – that being the prevention of mega bubbles popping. Valuations for everything from stocks to real estate have seldom been worse in history.

#85 Apocalypse Dude's Drunken BIL on 12.07.21 at 8:51 pm

Apocalypse, bro, where are ya?

We need help to PREPARE for this crisis!

The LCBO is running out of booze!

QUADRILLIONS MIGHT DIE (OR GET SOBAR)!

https://www.narcity.com/toronto/the-lcbo-is-reportedly-facing-a-booze-shortage-and-theyre-telling-people-to-stock-up-now

#86 IHCTD9 on 12.07.21 at 8:51 pm

#73 DON on 12.07.21 at 8:04 pm
@IH

I have an old version of Charlie…doesn’t take no for an answer. Rescue cat.

The big dog is named Charlie
——-

I love how old Male Cats turn into curmudgeons – just like me :).

#87 IHCTD9 on 12.07.21 at 9:06 pm

#77 crowdedelevatorfartz on 12.07.21 at 8:12 pm
@#55 Nonplused
“Everyone is going to have to get their own cat.”

++++

Just so long as they’re trained not to kill birds or kept indoors…
——

Training a cat ain’t easy, best to just keep ‘em indoors. We had Charlie outside for two weeks because our other Cat was basically at the end of her life. Every morning we’d be greeted by some offering he’d leave us. Half a rabbit, frog, a mouse, you name it, at the end of our walk. I got no confusion about the chances of training a Cat to not kill stuff when they’re out on their own – it’s basically not gonna happen.

#88 IHCTD9 on 12.07.21 at 9:41 pm

#63 crowdedelevatorfartz on 12.07.21 at 7:19 pm
@#37 Faron’s Feline Fantasy
” I wonder if the same could be done with a herd of cats to eradicate rodent problems wherever they spring up. ”

+++

Ever try and “make” a cat do something?
Anything?
——-

I tried. It took ages just to get C to pipe down while being fed. There are vids on YouTube showing Cats who have been trained to crap in the toilet, which would be awesome. For us, we hope to just stop him from drinking out of it.

What can I say? Charlie is basically a giant pr**, but in an endearing way. He kills anything that moves in the house that ain’t human, even our other pets. We had an Amazonian aquatic frog that surfaced in his tank one too many times… Ms IH was not impressed, but secretly, I gave C the nod as I scraped “Joe”‘s lifeless corpse off the kitchen floor. I like Cats ‘cause they walk the talk. You get exactly what you were told you were gonna get. A domestic killing machine, and an ego the size of Texas. Just what a guy with two boys needs to help raise ‘em up right. :)

#89 Ponzius Pilatus on 12.07.21 at 9:47 pm

The Pope chickened out.
Not coming to Canada to show some remorse on behalf of the Catholic Church for the Residential School debacle.
They are citing COVID concern.
Bullshit.
He just visited refugee kids in a camp on the Polish border.
No distancing and/or masks in sight.

#90 Calguy on 12.07.21 at 9:48 pm

I’m not sure how many millennials are that financially literate to know impact of rate increases. Parents also hyped up real estate and that could influence many younger buyers. HGTV and social media have a strong narrative too. Seems like people jumping in younger and younger.

More scary than rate hikes is the policies of governments dealing with Covid. Doug Ford wanted borders closed?! Governments have panicked over this latest variant. We were told life would return to more normal with vaccines. Even Dr. Tam said transmission from flights is very low. 1-2% of cases. Now we are getting more restrictions and cost to travel. For all those that want to shut things down they should be willing to go unpaid without salary or pension etc to see if they change their mind. We need to live with this. Hospitalization and deaths are low. The surge in Ontario and Quebec is people getting complacent and having gatherings not from travel. Wearing masks works just look at school transmissions etc. More pressing issues that get ignored are:
https://www.ctvnews.ca/excess-mortality-rate-spikes-in-b-c-and-alberta-for-reasons-beyond-covid-19-1.5697451

Let’s get on with life!!

#91 Ponzius Pilatus on 12.07.21 at 10:00 pm

#78 crowdedelevatorfartz on 12.07.21 at 8:16 pm
@#72 Ponzie’s Preventative Promises

“It’s part of the effort to gentrify the run down, crime infested area, that has plaqued Central Surrey for ages.”

+++++
Good luck with that.
——————-
I think they did a fairly good job in Vancouver’s Hasting Street and China Town.
But they probably went too far, changing China Town’s character and appeal to the tourists.
Too much concrete.

#92 dave on 12.07.21 at 10:01 pm

The cat looks like Writtle Duster

#93 Good luck Gundlach on 12.07.21 at 10:30 pm

#88 Billy Buoy on 12.07.21 at 9:11 pm
According to the expert:

“the Fed is trapped because according to Gundlach, as few as four quarter-point Fed rate hikes could break the economy.”

YES folks a 1% rise in rates could BREAK the eCONomy.

https://www.zerohedge.com/markets/our-time-jeff-gundlach-webcast-live

——————————————————————-

Joe Biden may win the Democratic nomination, but he cannot beat President Donald Trump, ’“Bond King” Jeffrey Gundlach told CNBC on Thursday. -Mar 5, 2020

#94 On a bender on 12.07.21 at 10:35 pm

Trudeau-Freeland-BOC “setting the stage”? Sounds like more Trudeau Drama to me. Trudeau is still borrowing to prop up boondoggles in other countries. Thinking he wants a stable country is naive to the extreme. Liberals spending mission creep means an election must drag him out of rates will ever change. Trudeau already announced the borrowing, why are you thinking he cares what you think? Trudeau has passed the trillion dollar mark and he’s after more. The only time he’ll quit is when you’ve been sucked dry and UN troops are rebalancing the population.

“ I’ll replace you”. That’s what he said. Don’t forget it.

#95 Blacksheep on 12.07.21 at 10:44 pm

“Finally, consider this: rates will rise. They must rise. There is no other effective counter to inflation”
————————–
Disagree.

Inflation is not the problem, but the solution.

The system of course talks a good game (2% target) but it’s all B.S. because Canada printed big time, right along with the US of A, which stopped our beaver buck from dropping through the floor when we spent 1/2 a trillion $ in a single year.

#96 SW on 12.07.21 at 10:45 pm

#63 crowdedelevatorfartz on 12.07.21 at 7:19 pm
‘Ever try and “make” a cat do something? Anything?’

Yes, but they have to want to do it.

I trained cats to open screen doors, without ripping the screens (string, pulley and some experimenting with weights). I trained a cat to open the bronze porthole of my boat. Kind of a heavy cat flap.

Like any training, it’s all about motivation.

#97 Blacksheep on 12.07.21 at 10:59 pm

Dolce,

Omicron will save us all.

Within two weeks, It will be invited to spread, world wide due to its mild cold like nature. Then the system will finally be forced to (regrettably) release its straggle hold on the human race, missing its golden opportunity to implement permanent oppressive societal change.

Better luck next time boys….

#98 al on 12.07.21 at 11:02 pm

Miniscule raises will come… Eventually…maybe.. if inflation stays above 5%..or 6%…or..lol

By the time it starts approaching anything significant it will be time again for the next recession…back to ZIRP and beyond..

#99 AM in MN on 12.07.21 at 11:06 pm

#83 Faron on 12.07.21 at 8:40 pm
#7 JR on 12.07.21 at 3:38 pm

Buy Bitcoin, it doesn’t care about any of this.

Also, why would you hold an “asset” outside of the purview of the SEC that regularly experiences manipulated stop sweeps? Makes any kind of risk management impossible.

——————————————————-

The whole point is to hold an asset outside the control of the SEC, which is the US Govt. Much easier to do with BTC than with physical gold, but both are assets, not securities, but the CBs have cornered the gold markets (for now).

Except with your RRSP money in an ETF, keep the cash buys small and in your personal wallet. Keep the keys private, add, don’t sell, ignore the noise, look at the trend.

The trend by the way is simple to see for anyone who can do math. The western world governments can never repay their debts and pension obligations in hard currency. They must devalue to keep going.

Any bets here on the price lumber or a lb of beef in 10 years? Real things that people need to buy?

The demographic dividend of the ’90’s of having westerners in their prime earning years and a billion poor workers from China, other Asia and Eastern Europe is now over. Cheap goods gone, lots of old mouths to feed. Governments will print money rather than face reality.

Is Canada really immune to the basic laws of economics in a way that say Turkey, Venezuela or Lebanon isn’t?

#100 catnogood on 12.07.21 at 11:10 pm

Nobody knows nutn’.

#101 Ponzius Pilatus on 12.07.21 at 11:33 pm

Trouble in paradise?

World News
Mexican national guard patrolling beaches in tourist areas in show of force
Reports said an extra 1,500 guardsmen were called up following violence which has seen two tourists killed recently by drug cartels.

#102 PastThePeak on 12.07.21 at 11:58 pm

BoC rate moves don’t tend to move equity markets (even Canadian ones). They follow the Fed primarily, and maybe the ECB.

BoC rate increases will affect borrowing costs of course, and likely the Loonie.

But 2.5%? Where did we get to on the last hiking cycle after a decade from the last recession? (Hint: 1.75%).

If the Fed can get to their Liftoff and raise rates a bit without the markets tanking, it is *very* unlikely they can raise higher than 1% before the good ship USA starts to roll over…

#103 Jane24 on 12.08.21 at 12:12 am

Dolce Vita thank you for the updates on Covid and Denmark. My daughter has just taken a new job there with the forlorn intention of commuting home to England on the weekends. I did tell her good luck with that when she accepted. Mother right again!

#104 Diharv on 12.08.21 at 3:37 am

If there is political interference from a profligate, irresponsible, debt-embracing and spendy federal government attempting to bend monetary policy, watch out
Our current government in a nutshell I would venture to say.

#105 crowdedelevatorfartz on 12.08.21 at 7:44 am

@#92 Ponzie’s pretty public places

“I think they did a fairly good job in Vancouver’s Hasting Street and China Town.”

+++
You are joking right?
When was the last time you went for a 10km walk in that part of town?
Even the police walk in pairs.
Harm Reduction, free needles, safe injection sites, on and on and on and in the 40+ years I have travelled downtown for work….those 10 city blocks have turned from an interesting neighborhood … into an open cesspool of crime, misery and hopelessness.

The only people that “did a fairly good job” were the crack dealers.

And now, even drug dealers are given a “pass” by our delusional Judges.

https://www.cbc.ca/news/canada/british-columbia/judge-drugs-addicts-sentencing-1.6275724

Drug dealers. Coming to every neighborhood near you.
It’s open season now.

#106 crowdedelevatorfartz on 12.08.21 at 7:54 am

@#90 Ponzie’s plague vs The Pope
“The Pope chickened out.
Not coming to Canada to show some remorse on behalf of the Catholic Church for the Residential School debacle.
They are citing COVID concern.”

++++
You’re speaking for the Pope now?
You might want to reverse your viewpoint.
It was Canada’s Indigenous peoples that are not travelling to Rome.
THEY have decided to postpone THEIR trip due to Covid.
The Pope hasnt announced a trip to Canada yet.
( I wonder if Trudeau’s Feds were paying for the flights the hotels, the meals, the clothes, and of course, the shoes….)
Nice try .
I’m sure all the lawyers are busy hammering out a billion dollar settlement behind the scenes BEFORE the Pope sets one foot in Empathyland.

Since it seems ” Blame = Billion$$$$$ ” these days.

#107 crowdedelevatorfartz on 12.08.21 at 7:57 am

@#89 IHCTD9

Hilarious!

#108 Felix on 12.08.21 at 8:07 am

“What it means”

What it means is that feline supremacy will greatly improve the planet as well as human intelligence.

#109 The Jaguar on 12.08.21 at 8:14 am

Charlie has earned his stripes. His expression says ‘I never took Cerb like some of you degenerates.’ lol!

#110 Diamond Dog on 12.08.21 at 8:40 am

#100 AM in MN on 12.07.21 at 11:06 pm

The fatal flaw in your argument is that you believe for some reason that the U.S. government through the Fed, treasury and justice don’t have the right, power or authority to shut down crypto currencies in their entirety. They do.

Crytpo exists because it’s been allowed to exist. Why, some will ask? Because of the wealth effect Crypto has so far provided (remember, Crypto flourished beginning in early 2016 under greasy win at any cost Trump). Here’s the thing… Crypto is a Ponzi and Ponzi’s do create a wealth effect until high enough numbers cash out and then it reverses and becomes a poverty effect.

The real threat of crytpo is as you say it is, the threat of replacing a failing fiat currency but lets suppose the U.S. dollar specifically was in threat of failing for real. Could anyone in their right mind imagine the U.S. government allowing Crypto to become a competing alternative if the dollar was under a true threat of existence? (Even just a threat to it’s value?) Not on anyone’s life.

First will come regulations, then comes wide spread fraud charges in the industry and valuations will crater at some point industry wide leaving everyone invested wounded and looking for someone to blame, not necessarily in this order. Then comes it’s legal end.

There are multiple reasons for this, competition to the Fiat currency belonging to the government with the power to shut it down… wide spread use as a black market currency… very real fraud related transactions in the industry, fraudulent corporate practices possibly industry wide, a very real threat to the value of the dollar and related but perhaps most importantly, tax leakage.

The Fed will want no part of tax leakage from a major poverty effect and there will be once regulations hit triggering what I believe will be its ultimate end.

Crypto’s tech including blockchain isn’t anything more than a different application of encryption that was around in the last millennium. Somehow we’ll all survive with Crypto gone. But of course, that’s just my opinion.

If I may so opine, your opinions on gold are also off. Gold is a commodity with value rooted in it’s use mostly as a luxury. Most of the gold that civilization has mined since the existence of humanity is still on display. When the GFC hit, gold lost more than a third of it’s value specifically for this reason, because its not used as a currency but as a commodity who’s value is strongly linked to luxury.

What props up the price of gold is ever growing global populations and higher GDP creating luxury demand, keeping up with or outpacing supply. Should the global population shrink or global GDP contract (i.e. supply exceed demand), so follows the value of gold.

As a physical asset, gold is a hedge against inflation but all physical assets are a hedge including land, real estate, cars and boats, etc., anything physical. Even Chinese pig iron (having lost 50% of it’s value due to their current ongoing housing bubble collapse this year, true story) is a hedge against inflation but don’t buy too soon:

https://www.youtube.com/watch?v=ffO3VxzQReM&t=992s

#111 Love_The_Cottage on 12.08.21 at 9:25 am

#48 leebow on 11.30.21 at 9:04 am

The existing vaccines just won’t work against omicron. They said it three days ago. I have no clue why everybody chose to ignore that report.
________
And just over a week later as scientists continue to study the effectiveness of vaccines against the latest variant they find that it appears to be effective.

Perhaps ‘everyone’ wasn’t ignoring the report, they were simply waiting for more facts.

People often look for instant answers that are black and white. The world doesn’t work that way.

https://www.cnbc.com/2021/12/08/pfizer-biontech-say-booster-dose-provides-high-level-of-protection-against-omicron-variant.html

#112 Apocalypse Dude's Drunken BIL on 12.08.21 at 9:28 am

‘Then we’d be discussing off-grid cabins in NB, with cord wood and moose meat.’

See, bro – even Garth knows, we NEED you back!

Help us PREPARE!

Come back, Apocalypse!

I need another drink.

#113 Dharma Bum on 12.08.21 at 9:49 am

#72 Ponzius Pilatus

And it will be called (you guessed it) The Flamingo Towers.
——————————————————————————————————-

Finally, a Canadian tribute and recognition of the infamous Bugsy Segal, proprietor of the legendary Flamingo!

https://vegasghosts.com/flamingo-las-vegas/

#114 Baph on 12.08.21 at 10:06 am

Garth, not as a recommendation, but just want to hear your take:
Would you say a combination of VGRO, ZPR, ZRE to be a better alternative to VBAL?
Just an example. Thanks!

#115 leebow on 12.08.21 at 10:26 am

#112 Love_The_Cottage

Moderna says otherwise, that the vaccine is not *very* effective. We’ll live to see. As to the original report, it came from the SA minister of health. He gave specific numbers that statistically imply zero or near zero efficiency. Of course, the report is limited to their vaccine supply, demographics, etc. May be they don’t have Pfizer at all – and then the natural experiment doesn’t apply to it.

While many things are not black and white, the rest of things ARE black and white. Making baseless conclusions is just as bad as needless hedging and indecision. Not being able to accept logically and mathematically correct conclusions is a mental weakness.

#116 RichardTO on 12.08.21 at 10:50 am

I don’t know why you censored my previous post, but now it seems that nuclear combat with Russia is officially on the table:

https://twitter.com/ASBMilitary/status/1468388070772850690

What’s the ideal portfolio mix for a situation when 30% of the population and most of the infrastructure on the coasts ceases to exist?

#117 Ponzius Pilatus on 12.08.21 at 11:13 am

114 Dharma Bum on 12.08.21 at 9:49 am
#72 Ponzius Pilatus

And it will be called (you guessed it) The Flamingo Towers.
——————————————————————————————————-

Finally, a Canadian tribute and recognition of the infamous Bugsy Segal, proprietor of the legendary Flamingo!

https://vegasghosts.com/flamingo-las-vegas/
————————-
If you called him “BUGSY”, you’d better wrote your will very quickly.

#118 Ponzius Pilatus on 12.08.21 at 11:22 am

#106 CEF
My friend lives in one of those new high rises in China Town.
Bought his condo 4 years ago.
Doubled in price since then.
And he likes living there.
So, who should I trust.
Someone who actually lives there, or the resident perma-complainer on this blog.

#119 Damifino on 12.08.21 at 11:38 am

#106 crowdedelevatorfartz

Drug dealers. Coming to every neighborhood near you. It’s open season now.
—————————————

Only in those neighborhoods full of drug buyers.

#120 Sail Away on 12.08.21 at 11:40 am

Hey, how are the folks who jumped on the renewables bandwagon about a year ago doing?

Just a quick peek at Brookfield Renewables shows -43% YTD. And that in a blisteringly successful year for most other stocks. Oh my.

Nonplused seems to have nailed it.

I drive a Tesla because it’s fast and cool, not to save the world.

#121 Sheesh on 12.08.21 at 11:48 am

#117 RichardTO on 12.08.21 at 10:50 am

That link doesn’t prove what you think it proves. At least not until Trump is back.

#122 Don Guillermo on 12.08.21 at 12:00 pm

#121 Sail Away on 12.08.21 at 11:40 am
Hey, how are the folks who jumped on the renewables bandwagon about a year ago doing?

Just a quick peek at Brookfield Renewables shows -43% YTD. And that in a blisteringly successful year for most other stocks. Oh my.

Nonplused seems to have nailed it.

I drive a Tesla because it’s fast and cool, not to save the world.
**************************************
That’s the perfect reason to own a Tesla. I just bought a new ICE vehicle in Mexico to counter PP’s public transit commitment. The world has a wonderful way of balancing itself.

#123 Faron on 12.08.21 at 12:08 pm

#100 AM in MN on 12.07.21 at 11:06 pm

Do I need to repeat for you “manipulated sweeps”? The implication is that Bitcoin is a ponzi and when the ponzi folds, your “trend” wont be worth the bits it was printed on no matter how much foo foo justification has been agreed upon by coiners like yourself.

Turkey, Venezuela and Lebanon all are run by dictators more or less and have been largely marginalized and unstable for many decades. Believe it or not, Canada is still a vastly more free country with a vastly freer and more stable economic system and isn’t showing signs of failure, not by a long shot. Regulation of financial markets and instruments enabled whatever wealth you enjoy frittering (high falutin gambling really) away on a stupid hashing system.

Have you heard the analogy between libertarians and house cats? Same applies to DeFi. Your playground will be dismantled when the builders have decided it’s time to do so and you will be left holding an old worthless tire. But preppers will be preppers. I guess the 50lb sacks of unmilled wheat give you something to sit on at least. AmIRite?

#124 Faron on 12.08.21 at 12:11 pm

#121 Sail Away on 12.08.21 at 11:40 am

I don’t know. I held ICLN for a while, but realized it was on the TSLA drooler sentiment train and left soon thereafter.

#125 Wrk.dover on 12.08.21 at 12:46 pm

Sunsets at Mallory Square, Key West , featured buskers in the late 80’s. An elfin little man had some 6′ tall stools with tops about a foot in diameter to jump from one to another, some cats, a flaming hula hoop to jump through, a chair to hold the back of and wave defensively while one cat roared at him like a lion, a bull whip to snap with the other hand, a whole circus act!

Greatest cat show on Earth!

#126 Sail Away on 12.08.21 at 12:51 pm

#125 Faron on 12.08.21 at 12:11 pm
#121 Sail Away on 12.08.21 at 11:40 am

I don’t know. I held ICLN for a while, but realized it was on the TSLA drooler sentiment train and left soon thereafter.

——–

Yep, another turd. And your attempt to trash TSLA fails again:

ICLN -33% YTD
TSLA +20% YTD [Score!]

Nonplused called it.

#127 Faron on 12.08.21 at 1:30 pm

#121 Sail Away on 12.08.21 at 11:40 am

Wait, BEP.U is down 11.5% YoY while spitting out 3.5% in divvies. Meanwhile, your Vale is down 24% since you leapt on the equally lemming-esque commodities train 4 months ago. That’s 60% annualized.

Anyhow, thanks for the commentary.

#128 Sail Away on 12.08.21 at 2:02 pm

#128 Faron on 12.08.21 at 1:30 pm
#121 Sail Away on 12.08.21 at 11:40 am

Meanwhile, your Vale is down 24% since you leapt on the equally lemming-esque commodities train 4 months ago. That’s 60% annualized.

——-

Haha, whataboutism… but I’ll respond:

That tranche of four miners from Aug (BHP, VALE, LIF, NTR) today averages -4.96%… and they’ve paid 4.25% div in that time. Let’s call it even-ish, shall we? That, my friend, is investing.

#129 Linda on 12.08.21 at 2:42 pm

#37 ‘Faron’ – believe it or not, your idea of cats being used as pest control in a commercial manner is already in existence. There is at least one company in the USA that rents out groups of cat rescues to do just that. This pays for the ongoing rescue, care & housing of the cats in question.

#130 Quintilian on 12.08.21 at 6:19 pm

Tiff Macklem has spoken.
He will slay, mercilessly the inflation dragon with a wet noodle.