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By Guest Blogger Doug Rowat
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What moves markets?
Politics? Nah. Apologies to both Democrats and Republicans, Conservatives and Liberals, but markets care little about ruling parties and their policies.
Wars? Terrorism? Sometimes. But unless it’s of catastrophic significance (like WW II catastrophic) markets quickly ignore these events also.
Valuations? Little influence. JP Morgan, for example, highlights that the forward P/E of the S&P 500 has only a 3% correlation to subsequent one-year market returns.
Trucker protests at the US-Canada border? Be serious.
Central banks? The economy? You’re getting warmer.
Corporate earnings? Now you’re cooking with gasoline.
Perhaps the most powerful influence on equity market direction is corporate profitability. If companies earn more, markets reward it. The market’s correlation to earnings growth is so highly positive that there can be no doubt that earnings massively influence market performance. For example, S&P 500 earnings and the S&P 500 Index are nearly 95% correlated.
But it’s not just US corporate earnings and US equity markets where this strong positive relationship exists, the relationship is similar across global corporate earnings and global equity markets as well. You can visually see the relationship here with the MSCI ACWI Index, which is a widely followed global equity benchmark:
MSCI ACWI Index: where earnings go, so goes the market
Source: Dynamic
So it begs the question: what are the current assumptions for corporate earnings growth? Fortunately, expectations remain robust across the board. The unexpected can sometimes occur (which is why a balanced portfolio is always our recommendation), but in terms of what’s visible to analysts at the moment, earnings look set to advance at a double-digit pace:
Consensus earnings growth expectations (%)
Source: FactSet
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Finally, the inverted yield curve has probably been a better predictor of recessions than any bow-tied economist who’s ever appeared on CNBC. An inversion of the US 10-year and US 2-year Treasury yield has correctly predicted the last eight recessions going back to the 1970s and, of course, correctly predicted the most recent recession in 2020 when the curve inverted briefly in 2019 (see charts below).
Normally, the yield of longer-term Treasuries is higher than shorter-term Treasuries. This makes sense because investors expect a higher yield for committing their money over a longer investment horizon. However, when the yields invert, investors are signaling that they have less confidence in the economy and are shifting more into longer-dated Treasuries thus subduing their yields.
Presently, there’s both bad news and good news for yield-curve watchers. The bad news is that we’ve been moving steadily towards inversion for almost a year. The good news is that, despite the trend, inversion still isn’t imminent and there remains breathing room, albeit a shrinking supply of it. Further, even if an inversion were to occur, it historically takes more than a year, and occasionally more than two years, before the onset of an actual recession.
In other words, keep your eye on the curve, it’s an important recession indicator, but to panic now would be like my wife screaming when she sees a spider in the corner.
It’s an overreaction to the harmless. Worry about the spider when it’s sitting on your pillow.
10-year Treasury yield minus 2-year Treasury yield (with recessions)
Source: FRED; shaded areas = recessions; Levels below black line indicates a yield inversion.
Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Investment Advisor, Private Client Group, Raymond James Ltd.
94 comments ↓
Keep calm chive on.
Unless you’re waiting for your Bentley….
https://www.reuters.com/business/container-ship-carrying-volkswagen-vehicles-catches-fire-near-azores-2022-02-18/
Toronto is under siege.
The next battlefield in this global WW3.
Police vehicles have blocked every road – Bloor St down to Richmond. Spadina eastward to Church.
A staggering army of cars and personel.
The weekend overtime bill must be amazing.
(How the ‘Hospital Capacity’ coming along?)
Now in Year 3 this permanent fictional State of Emergency and social and economic reset no longer may be termed a Consp. Theory.
Normal is not in the plan.
Not in the Former First World Countries.
What moves markets?…. Corporate Earnings.
What moves investor sentimemt?….. Governments freezing bank accounts.
The financial system is about to become revamped like you’ve never seen.
Hope your ready for it?
I know I am.
So to take your a analogy to its (ill)ogical conclusion, the Fed is like you when you put the spider on your wife’s pillow and then wait to see what type of reaction you get!
#108 Ponzius Pilatus on 02.19.22 at 10:40 am
Hi Sinan,
Your year end bonus is burning up on the ocean.
A Kia will have to do.
*********************************
Those lithium ion battery fires can be difficult to deal with.
Doug – what recommendations do you have for Canadians who don’t want their investments or cash kept in the accounts of a Canadian financial institution?
Why would I put my hard-earned cash in a bank account that can be seized or zeroed out by a fascist government?
End of 2021 to yesterday:
2-year yields
0.734% Dec.31
1.47% Feb.18
Change = +100.27%
10-year yields
1.512% Dec.31
1.927% Feb.18
Change = +27.45%
2-year treasury increasing 3.65X as fast as the 10-year treasury.
———————-
Thanks for warning us Doug.
Forgot the spreads…
Dec 31 0.778%
Feb 18 0.457%
In 49 calendar days the spread narrowed by 0.321%.
%/day = 0.00006551020408
If this rate of narrowing keeps up, in 70 calendar days time (April 28, 2022) the spread = 0%.
Again, thanks for warning us Doug.
@#110 AM in MN on 02.19.22 at 10:55 am
For those who think having some Bitcoin for protection is just a conspiracy theory, found this comment on the London FT.
——————————
Excerpt;
As a side, which is really the end result of unbridled excessive insane government overkill, I now know two people who made small donations to the truckers three weeks ago, never went to Ottawa, and have had there bank account and credit cards frozen in the last few days. This is right up there with the most disgusting thing I’ve seen in my country. Stalin would endorse it. Their lives are in peril right now, all because they exercised their democratic rights to support a protest. Yes, this is Canada right now.
——————————-
For those who think Canada is a Rule of Law Country….
–
If Canada were a rule of law country,
the Karen Konspiracy Konvoy would have got the boot from Ottawa 3 weeks ago.
Off topic, well unless Truckers in your backyard…
“Canadian ATMs Now Asking Your Political Views Before Allowing You To Withdraw Money”
https://babylonbee.com/news/canadian-atms-now-asking-your-political-views-before-allowing-you-to-withdraw-money
Babylon Bee will not let go of Trudeau. For example:
Questions asked by the ATM will include (my faves from the list):
What are your pronouns?
Do you worship any other god besides Trudeau?
———–
And ya, they had something to say about the Bouncy Castle too:
https://babylonbee.com/news/horse-mounted-canadian-police-prepare-to-storm-bouncy-castle
On the Permanent Economic Shutdowns.
Here we go guys…Normal is not in the plan.
https://ottawacitizen.com/news/local-news/more-contagious-ba-2-sub-variant-spreading-in-canada-complicating-opening-plans
More contagious BA.2 sub-variant spreading in Canada, complicating opening plans
“Our multi-scale investigations suggest that the risk of BA.2 for global health is potentially higher than BA.1.”
—-
—- The reason the Provinces ‘loosened up’, all of a sudden is that the power is being transferred to the Federal Level. They wasted no time in drafting 101 new laws + permanent ‘Emergency Act’.
From a week ago:
#52 TurnerNation on 02.12.22 at 8:46 pm
— One person’s opinion on the future here in the Republic of Fizerstan:
https://twitter.com/DrJuliePonesse/status/1492223162888724481
JustinTrudeau’s 2021 deal with Pfizer (35M boosters in 2022 & 30M in 2023) and the option to extend vaccine delivery until 2024 up to 120M doses, means he MUST keep the mandates on pain of breaking the contract or wasting funds.
—
Learn from history. Same old. All those ‘voluntary’ isolation centers, built and empty.
.Ontario judge orders up to $20 million of protesters’ cash, cryptocurrency frozen (toronto.ctvnews.ca)
https://en.wikipedia.org/wiki/Internment_of_Japanese_Canadians
“From shortly after the December 7, 1941 attack on Pearl Harbor until 1949, Japanese Canadians were stripped of their homes and businesses, then sent to internment camps “
#5 Don Guillermo on 02.19.22 at 12:24 pm
#108 Ponzius Pilatus on 02.19.22 at 10:40 am
Hi Sinan,
Your year end bonus is burning up on the ocean.
A Kia will have to do.
*********************************
Those lithium ion battery fires can be difficult to deal with.
—————————————–
They sure are. Good thing other battery tech such as aluminum ion batteries without this problem are being developed.
Thanks for the post Doug.
I guess it’s all about perspectives.
The Federal Reserve likes to tell people it’s only a baby Daddy Long-Legs Spider in the corner.
The poor and Play-It-Safe Seniors would like the Tarantula removed from their faces so they can see clearly again.
Both are only fatal if you allow them to be…
M47BC
Nice write up. Also, drawdowns on the sp500 not so bad and there has never been a recession when the yield curve is above 50 basis points.
@#109 Floppie
“I mean, look, the Canadian flag has been inverted and disrespected lately by a small percentage of citizens and no one’s taking about replacing that…”
+++
Yet…..
@Sail Away
2 things: the real “insurrection” in Ottawa has cost tax payers at least $16 million now.
Also: its convenient for you to not track data on race because it allows you to ignore real racism or in this case the actions organized and executed by a bunch of racist white Canadians (King and Lich) that impacted a majority non white industry. Although you will happily deploy your etnicity (while seeming not to know the difference from race and while not beimg a visible minority) to deflect any possibility you might be racist AF or condone others who are (Trump, Elon). You display stunning levels of ignorance or a great wilingness to gaslight.
…and that other Mr. Market irritant,
Ukraine.
[not a good day here in Europa]
https://twitter.com/BNONews/status/1494948904286269440
https://www.bbc.com/news/world-europe-60443504
Result:
https://twitter.com/bsant54/status/1494998970048954370
https://twitter.com/bsant54/status/1495003139694419968
Russians telling their side of the story:
https://twitter.com/mfa_russia/status/1494999157752442889
——————–
What a crazy messed up World at present. I stand with the Ukraine.
PS:
Boris delivers a passionate speech about Ukraine & what is at stake, read thread by La Repubblica reporter, in English…
https://twitter.com/antoguerrera/status/1495008157596368897
I recently got paid $250 to listen to someone tell me which washroom I’m allowed to use at work.
That’s o.k.
Whether I’m at work, or at the airport, I’m only interested in keeping an eye on my own luggage…
M47BC
Another example of why it never makes sense to turn projects over to the government:
https://boereport.com/2022/02/18/canadas-trans-mountain-says-pipeline-expansion-cost-surges-to-c21-4-billion/
We could have had a US Nimitz class aircraft carrier for that, to help with our ongoing invasion of Poland. Although we would need new planes too but by the time the pipeline is complete I am sure there would be money for that too.
And to think they could build these things in the 60’s no problem.
The basic problem with the economics of having the government build things is not the huge expense, after all that money ends up somewhere. It is the lost productivity and inefficiency. We are at 3 times the cost so far, which means 2/3 of the effort was completely wasted with nothing to show for it. We could have had 3 pipelines for the effort of building 1. Now there probably would have been overruns on that 1 too, so let’s say 2 pipelines for the price of 1. That wasted productivity could have built schools, roads, hospitals, an aircraft carrier, who knows what. And productivity is not like money; you can’t print more of it. Once it is gone it is gone.
But if you wait until the spider is on your pillow it’ll be too late you’ll get stung. The smart money scream when they see the spider in the corner and start adjusting and preparing.
Faron: go in peace, my son, and sin no more.
And please: stop clogging the blog (blog clog?) with your unrelenting obsession of all things Sail Away. I’m fascinating, true, but Garth’s blog is not the place. Expand thy mind.
Since everyone here splashes their opinions – I’ll give this a go unless Herr Turner scrubs this comment because HE doesn’t find it “acceptable”.
The Liberal Parties’ invocation of the Emergencies Act and subsequet freezing of Canadian Citizens bank accounts is mind numbingling chilling in a supposed Liberal democracy. Now, if you have an opinion that is different than the Governments – your life can become a living hell because you support free speech and protesters rights. Worse, you can be denied future credit and targeted by Canadian regulatory agencies without due process of law or a court order. What about the overreach in freezing online social fundraising? If a patron fights for freedoms in authoritarian regimes in other parts of the world, all that regime has to do is shut it down the fundraiser using Canada as an example of fine Government practice.
Look what happened to Hong Kong. It is now becoming just another Chinese city and billions of dollars have already left the city for safer havens. You don’t think this can’t happen in Canada? It already has. It is well documented all over the interweb, about investment leaving Canada as a result of Liberal Pary Policies.
Canada is at a turning point, not because of the Wuhan Flu or challenges to the suply chain, or a handfull of well meaning truckers and supporters fed up with divisive mandates unsupported by science, it is because a draconian, power hungry Liberal Party that has lost perspective on what it means to govern a country. This is no joke or slander on Liberal minded people. This is about a Government recklessly spendind taxpayers dollars, chases investment out of the country and then taking away Canadian rights and freedoms, because of opinions.
With all due respect to your analysis Doug, you forgot to mention that your work applies to a normally functioning democracy where its participants have no fear from rerpession or coercion. Those days by all recognition have been trampled under the hooves excessive police power and a divisive leader.
#5 Don Guillermo on 02.19.22 at 12:24 pm
#108 Ponzius Pilatus on 02.19.22 at 10:40 am
Hi Sinan,
Your year end bonus is burning up on the ocean.
A Kia will have to do.
*********************************
Those lithium ion battery fires can be difficult to deal with.
———————
The good thing is, we’ll soon have self driving and flying cars.
Then you just order your custom made Porsche from the factory in Stuttgart.
And it will fly itself over and land right in your driveway.
No need for dealerships and freighters any more.
I feel sorry for the car salesmen.
Well, not really.
#19 Nunplused
And productivity is not like money; you can’t print more of it. Once it is gone it is gone.
—————
Interesting.
You’re usually postulating that stocks are not like money, and now you extend that logic to productivity.
Shawn,
What’s your response?
#105 Sail Away on 02.19.22 at 10:16 am
“as ‘unacceptable’, coupled with citizen account freeze is now quite clearly proven reality. And political leadership changes- a precedent for labelling and penalizing opponents’ livelihood has been established.”
———————————-
To be “de-platformed” from the Financial system, all it takes is ”unacceptable views”.
As commentators have pointed out we have had decades of Foreign Money laundering and flows of dirty money into Canada yet nothing has been done.
https://calgaryherald.com/opinion/columnists/corbella-instead-of-following-the-money-behind-trucker-convoy-lets-go-after-those-who-launder-their-money-here
The Trudeau Foundation charity can accept huge amounts of Foreign Money as “Donations”.
https://calgaryherald.com/opinion/columnists/corbella-when-foreign-money-helped-trudeau-win-elections-he-doesnt-care-but-hes-going-after-the-truckers
Wham! – Just like that I understand the value and global appeal of Bitcoin, and how much utility it may have to be able to drop an ounce of gold into the hands of a group in a society where what are “unacceptable views” will continue to grow.
On the same thread regarding the freezing of financial assets without due process or the rule of law, I would say that anyone giving retirement or financial advice has a fiduciary duty to advise on the legal protection of those assets.
It is not an accident that the US has 50% of the world’s stock market valuation, but only 25% of its GDP. It’s Courts have real power and it’s constitution does not have a Sec. 2 that renders it largely a suggestion. (SCoC Taylor)
People with real money understand what it means to be protected by the rule of law, that the executive branch of whatever government can’t just take what you’ve got.
I suspect that many people will be examining their financial situations and seeking some protection. This should include real estate holdings now.
Not sure how this plays out after the EA is dropped, which I suspect it will be on Monday because Jr. doesn’t have the votes, despite Garth’s confidence (arrogance?) earlier this week that it was a rubber stamp.
Plenty of backbench Liberal and NDP MPs know that this is a political death sentence, a writing of your opponent’s campaign material, to vote in favour of the suspension of the rule of law and private property rights based on political views.
The rabble in the street could have been cleared by City cops, all the laws needed are in place, no need for the EA.
What many are figuring out is that this is a shot fired in the great reset, and many in the global financial community are watching to see how it plays out. No need to jail your political opponents, just destroy them financially and the majority will get the message and keep their heads down, keep working hard, keep paying taxes and interest and do as they’re told.
REASONABLE FREEDOM TO PROTEST
yep, people should be free to protest.
But the foundation of western law is reasonableness.
Is it reasonable to hold hostage the downtown of a city, and damage its businesses and residences for three weeks and beyond.
NOPE
In order to function, civil society has to have some limits, and antivaxxer protest exceeded those limits. Time to move on or be moved on.
Turkey’s Economic Crisis Gets Worse: https://www.youtube.com/watch?v=zfEAYbAcwsQ
Interesting to see the schemes and machinations of those in charge whom do not understand economics or money and where they have considerable influence over those in the Central Bank.
Thanks for your level headed FINANCIAL advice Doug.
Not sure about where some of the commenters head’s are at though, seemingly clouded by conspiracy & confusion.
This is a blog about real estate & investing.
Go away if the focus is not on this blog’s subject at hand.
“Now you’re cooking with gasoline.”
What have you got an old WWII Coleman back pack stove? Ray Crock liked “cooking with gas” because natural gas French fry cookers were much better able to keep up with fry demand than electric ones were, due to higher BTU output. Something about putting frozen fries with high water content into oil and trying to maintain 400 degrees. Cold oil makes soggy French fries. Natural gas worked better for their grills too. So anything that worked better became “Now you’re cooking with gas!” Whole chapter on it in his book.
But other than an old Coleman, which is supposed to run on Naphtha but will run on gasoline in a pinch and with higher fire hazard, I’ve never heard of anyone cooking with gasoline. Too many chemicals in there. Engine cleaners and stuff. Toxic.
Safety tip for the upcoming camping season: Kerosene is a much safer way to start a camp fire than gasoline, because it has a higher flash point and doesn’t “whoosh” as bad. Less likely to loose your eyebrows.
Diesel is also safer but smoky. Stay safe out there!
SEEKING VENUE FOR MY COUNTER PROTEST
For those that believe the actions of the antivax protesters in Ottawa are reasonable and should be allowed to continue, great for you.
I am thinking about organizing a counter protest.
Maybe you can provide your address and my self declared freedom of political express can be arranged take place on your street.
My counter protest would have the following features;
– trucks parked in front of your house with the alarm systems/horn blasting 24/7.
– a hot tub, bouncy castle, pig roast, espresso shop on your front lawn.
– don’t worry about providing power for us, we have truck mounted diesel generators that will be running 24/7.
– and don’t worry about bringing in porta-potty’s we have heavy equipment that will just dig trench latrines in your front lawns.
– maybe bring in a dumpster as we will be leaving all our garbage.
– and of course we will have a rotating cast of several hundred protesters and hangers-on. Some of them will be sort of “colourful” as we will be attracting all kinds of nutbar extremists.
Thanks for your understanding and support, we hope to wrap up the protest once all levels of government make vaccine mandatory for all Canadians.
#22 Trucker Supporter on 02.19.22 at 2:32 pm
With all due respect to your analysis Doug, you forgot to mention that your work applies to a normally functioning democracy where its participants have no fear from rerpession or coercion.
—-
I’m talking about global corporate earnings and a US Treasury yield curve. I have to admire your attempt to transition all that to a rant on Canadian democracy.
Now make something rhyme with orange.
—Doug
“Look what happened to Hong Kong. It is now becoming just another Chinese…..”
Hey Hong Kong, meet your new boss, same as the old boss.
So I pulled out my hibachi the other day and lit a bonfire.
Offerings to the gods included old Australian bank statements, old Australian Superannuation statements and old Canadian Bank Statements.
Could not bring myself to burn any old Canadian tax stuff.
I have 20 years of that stuff stockpiled and have never gotten rid of any of it since I arrived.
Last I checked, you have to keep up to seven years of your tax documents in case you get audited.
So if I cull up until 2012, just to be on the safe side I should be safe, right?
I’ll think about it some more.
I once took my vehicle back to the windshield place as it developed a small leak.
The guy tried to charge me to fix it, I whipped out the old receipt from 10 years earlier, that stated the first fix was guaranteed for life as long as I still owned the vehicle, in the fine print.
“Who keeps that stuff, he shouted at me.
I do…
M47BC
We support Trudeau, Freeland and the the police with the way they are dealing with the situation in Ottawa and the rest of Canada. Let’s hope these protesters realize that
in a democracy they must be ELECTED to have an
influence on policy and legislation. Hopefully they will come to realize this and GO HOME.
266 Disbelief
“For someone who fancies themselves a doctor, you’re
not very bright.”
—————————————–
It’s never a good start when you reply with a personal insult. People tend to take you less seriously. And I am not a doctor. Just a shortened version of an earlier blog handle which was more sarcasm than anything.
I get that you are angry with the central bankers. Many of us are. ZIRP really doesnt help anybody.
As far as RE goes, please see my response to blogger Quintilian at post 87 from yesterday. I have no problem with a large correction, though I would be concerned for others.
The markets over 5 years? Canada, Japan about the historical 7% ave. London? Flat. The US has been the
outperformer. Those who are balanced and diversified
have done fine over this time frame, absorbing the dips and muting the peaks.
I also get that 27 years of labour can make you hurt…..
everywhere…….all the time.
But, from your reply earlier to Barb, you are wealthy by any measure. I presume $10M+, so you can certainly handle a substantial correction.
So why not retire (you can afford it) and help out others as I have suggested?
Well, time to weigh in on the truckers again I guess.
At first I thought the convoy was hilarious. A weekend in Ottawa seemed like no big deal. But 3 weeks? Even Jordon Peterson thinks it is time for them to go home as they had made their point and the disruptions were counter productive.
But messing with the banking system? That is the sort of thing that can have long term unforeseen consequences. Time to move all your money to a local treasury branch. I’d suggest some “midnight gardening” but even that doesn’t work very well if you can’t use the banking system to clear your trades.
Meanwhile this is what 20 real terrorist can do in one night:
https://boereport.com/2022/02/18/canadian-govt-condemns-violent-attack-on-coastal-gaslink-pipeline-work-camp/
Probably going to run over 16 million dollars. And it’s natural gas (French fry fryer fuel), not oil! Cleanest stuff we have that works when the sun goes down. Oh well I read they have a potato shortage in Japan right now so they probably don’t need to run the French fryers so much. It’s sushi for dinner tonight I guess! No flash freezing it first though, that takes a lot of energy, so it will be served truly raw and parasites active. Yum! Nothing like fresh parasites for dinner.
Now make something rhyme with orange.
—Doug
///////////////////////////////
Hey Robax, I’m just about to burn some old tax stuff, but I’ll make time for the challenge.
Should have known there’s gonna be trouble in Ottawa when you mix Red with a hint of Orange.
The Blue guys are nowhere to be seen, so Trudeau says suck my Lozenge…
M47BC
#21 Sail Away ⛵
To Faron:
🌈 🙏 🦄
and, they lived happily ever after…
💘
——————
…as if.
#6 THE DANDADA on 02.19.22 at 12:28 pm
Doug – what recommendations do you have for Canadians who don’t want their investments or cash kept in the accounts of a Canadian financial institution?
Why would I put my hard-earned cash in a bank account that can be seized or zeroed out by a fascist government?
_______
I completely understand your perspective.
Might I suggest you use a mattress. Just make sure you don’t have bedbugs.
Thanks for another thought-provoking post, Doug!
Seeking to take your thought process further in the context of the B&D portfolio promoted by your team, what would be the (high-level direction of) adjustments to such a portfolio if the inverted yield curve were to occur?
And also, what would be the general duration for making such adjustments to the B&D portfolio after an inversion (if it were to occur)?
Many thanks, again!
A question for me!
#24 Ponzius Pilatus on 02.19.22 at 2:57 pm
#19 Nunplused
And productivity is not like money; you can’t print more of it. Once it is gone it is gone.
—————
Interesting.
You’re usually postulating that stocks are not like money, and now you extend that logic to productivity.
Shawn,
What’s your response?
************************
Okay and Nonplused comment was:
The basic problem with the economics of having the government build things is not the huge expense, after all that money ends up somewhere. It is the lost productivity and inefficiency. We are at 3 times the cost so far, which means 2/3 of the effort was completely wasted with nothing to show for it. We could have had 3 pipelines for the effort of building 1. Now there probably would have been overruns on that 1 too, so let’s say 2 pipelines for the price of 1. That wasted productivity could have built schools, roads, hospitals, an aircraft carrier, who knows what. And productivity is not like money; you can’t print more of it. Once it is gone it is gone.
***********************
Sounds quite right to me assuming there was actually a big inefficiency caused by government.
I agree, It’s not money that’s the real waste. It is the human effort and any other wasted resources that could have been doing something more useful.
@Sail Away
Aw, who else here combines condonement of racism, right-wing gaslighting and top ticking of stocks? with a bonus side of crappy COVID takes? you offer so much.
These capital projects are all public goods, and thus the private sector would never build them without payment from the government.
https://en.m.wikipedia.org/wiki/Public_good_(economics)
#34 Flop… on 02.19.22 at 3:26 pm
So I pulled out my hibachi the other day and lit a bonfire.
Apparently the new manner of deleting unwanted papers is to tear them up by hand and flush them down the toilet.
I’ve met a lot of lefty teachers in my life, even married one, none as out to lunch as this guy.
#27 Reality Check on 02.19.22 at 3:09 pm
REASONABLE FREEDOM TO PROTEST
yep, people should be free to protest.
But the foundation of western law is reasonableness.
Is it reasonable to hold hostage the downtown of a city, and damage its businesses and residences for three weeks and beyond.
NOPE
In order to function, civil society has to have some limits, and antivaxxer protest exceeded those limits. Time to move on or be moved on.
*********
Apologies for being off topic.
Agreed! Reality Check.
An immature Elon Musk walked back his disgusting Hitler comment. As the onion is peeled back this is not a Trucker Convoy…exactly how many truckers showed up? This is a nut bar right wing fanatic grouping of like minded jackasses who fear a needle or can’t wear a simple mask for a couple minutes at a time for the greater good, but I bet they are sure glad the state made them get their Polio shot when they were young, which has reared it’s ugly head in Africa. Sorry the vaccinne must have genetically modified my opinion…but unBloodly likely. Or it could have been the jack ass they interviewed that likened our collective grandparent’s sacrifices in past wars to what he was doing in Ottawa. After that comment, all I saw was stupid moving his lips.
“Now make something rhyme with orange.
—Doug”
I once was at the top of The Blorenge
walked up with a beer and an Orange
when lo and behold
one one ledge it was told
I rolled my Orange down t’ Bolrenge.
Hey, do I win some free financial advice?? :-) :-)
Used to do a lot of hill walking in Britain before COVID…
I wonder about some of Biden’s scary Ukraine rhetoric.
If Russia invades in a big way Biden can say I warned you. If Russia just keeps destabilizing the Donbas than Biden can say his tough threats stopped them from doing worse. Either way he won’t get hurt as much politically as he did with the Afghanistan withdraw fiasco and midterm elections are around the corner.
A consequential game is being played and only a few insiders really know the rules.
#40 Archie the archer on 02.19.22 at 4:17 pm
#6 THE DANDADA on 02.19.22 at 12:28 pm
Doug – what recommendations do you have for Canadians who don’t want their investments or cash kept in the accounts of a Canadian financial institution?
Why would I put my hard-earned cash in a bank account that can be seized or zeroed out by a fascist government?
_______
I completely understand your perspective.
Might I suggest you use a mattress. Just make sure you don’t have bedbugs.
——————-
Haha,
Good advise.
I hear bedbugs are big spenders.
#23 Ponzius Pilatus on 02.19.22 at 2:49 pm
#5 Don Guillermo on 02.19.22 at 12:24 pm
#108 Ponzius Pilatus on 02.19.22 at 10:40 am
Hi Sinan,
Your year end bonus is burning up on the ocean.
A Kia will have to do.
*********************************
Those lithium ion battery fires can be difficult to deal with.
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The good thing is, we’ll soon have self driving and flying cars.
Then you just order your custom made Porsche from the factory in Stuttgart.
And it will fly itself over and land right in your driveway.
No need for dealerships and freighters any more.
I feel sorry for the car salesmen.
Well, not really
*********************************
All 911’s ever made came from one factory in Stuttgart. Other Porsche models are made in Leipzig, Germany and Bratislava, Slovakia. To my knowledge none have flown over but some people do fly over to pick up their order, drive around Europe for a while then have it shipped to desired destination. My Mazatlan Jetta was made in Mexico. Obviously not the same quality but still a nice vehicle. Perfect for here. Driving around with Reggaeton tunes cranked!
Anyone can buy bitcoin with dirty money and launder it through bay realty driving prices into the stratosphere.
…these are some takes from bay realty:
“Established in 2011, Real Estate Bay recognizes Bitcoin holders as VIP clients and now extends an option of buying ANY real estate property in Canada using Bitcoin, including regular listings that are priced in fiat, such as Canadian Dollar (CAD).”
“Real Estate Bay Realty employs over 100+ real estate agents and processed billions of dollars in sales.”
“Bitcoin is enduring a series of bull runs followed up by mind-boggling speculative bubbles primarily caused by greed and Fear of Missing Out (FOMO factor) and subsequent corrections.”
“Real Estate Bay Realty enables you to pay for Real Estate directly with Bitcoin. We accept a payment in Bitcoin and then issue the equivalent amount of fiat (Canadian Dollars), which is then used as a payment upon closing of the real estate transaction.”
I brought this up occasionally over the last 10 years with zero response … my word on it didn’t drum up interest from the comments section …If any may be interested now – just google up – Real Estate Bay Realty.
I like different perspectives on markets, equity, credit or whatever. I will say that the fear of losing is what really drives things (like your life and the consequences that will follow). As Spock would say, “Live long and prosper”.
There are forces against me. I buy individual stocks but I have criteria. The most important is cashflow followed by debt to equity plus a host of others. Life has taken a stick to me more than a few times but courage/attitude is not something I lack.
I have had dark days where I wondered if I would ever get back on my feet. The bullies are mean to you when you are lying on your back – such are the losers and I am a fast learner with a long memory and know what has to done.
I don’t have answers to what you really want but I will be your friend if I like you. You are free to choice your own favorites. A lot of life is luck and the willingness to play politics to your benefit. I got a kick of my BIL who served in the Cdn Armed Forces – I got promoted because I had the loudest voice. He was far more. Would I follow him into battle? Not if he gave me stupid orders (Trudeau).
I respect competence so I guess I will never like most bearcats (seemed like a nice way to describe them) Something fluffy without purpose and a need to be fed at no cost to them.
DELETED
#6 THE DANDADA on 02.19.22 at 12:28 pm
Doug – what recommendations do you have for Canadians who don’t want their investments or cash kept in the accounts of a Canadian financial institution?
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Hi Dandada, a good start is to read this blog more often. And if all your cash is sitting in a bank, I’d recommend reading the posts on here, daily.
#24 Ponzius Pilatass on 02.19.22 at 2:57 pm
#19 Nunplused
And productivity is not like money; you can’t print more of it. Once it is gone it is gone.
—————
Interesting.
You’re usually postulating that stocks are not like money, and now you extend that logic to productivity.
Shawn,
What’s your response?
——————————-
Money can be used again and again so long as it remains in circulation, to facilitate trade. Productivity, when used say to dig holes and then fill them up again, or break widows just so you can repair them, or simply wasted on “features” that do not address the goals of the project, represents lost manhours (or peoplehours I suppose) and materials that can never be recovered. Surely you can see even just that?
And yes, stocks are not money. They are fractional ownership or factories and other business ventures, not useful for exchange unless first monetized through sale for money, in which case the seller now has the money but no factory and the buyer now has a factory but no money. No new money is created. How can this be any more clear?
The 25% never cease to amaze.
When Elon Musk tweets, Tesla shares either go up or down by the billions.
When an Instagram influencer Tweets, billions of men hand over their paychecks. Interesting times.
@#43 Faron
I draw the line at gas lighting….from my experience….too dangerous.
@#49 Peter from the Bow River…
“I wonder about some of Biden’s scary Ukraine rhetoric.”
++++
Could it possibly be about….water for 2 million Crimeans?
https://www.reuters.com/world/europe/russia-says-ukraine-blocking-water-supply-crimea-european-lawsuit-2021-07-22/
#42 Shawn on 0#40 Archie the archer on 02.19.22 at 4:17 pm
#6 THE DANDADA on 02.19.22 at 12:28 pm
Doug – what recommendations do you have for Canadians who don’t want their investments or cash kept in the accounts of a Canadian financial institution?
Why would I put my hard-earned cash in a bank account that can be seized or zeroed out by a fascist government?
_______
I completely understand your perspective.
Might I suggest you use a mattress. Just make sure you don’t have bedbugs.
——————-
Haha,
Good advise.
I hear bedbugs are big spenders.2.19.22 at 5:02 pm
A question for me!
#24 Ponzius Pilatus on 02.19.22 at 2:57 pm
#19 Nunplused
And productivity is not like money; you can’t print more of it. Once it is gone it is gone.
—————
Interesting.
You’re usually postulating that stocks are not like money, and now you extend that logic to productivity.
Shawn,
What’s your response?
************************
Okay and Nonplused comment was:
The basic problem with the economics of having the government build things is not the huge expense, after all that money ends up somewhere. It is the lost productivity and inefficiency. We are at 3 times the cost so far, which means 2/3 of the effort was completely wasted with nothing to show for it. We could have had 3 pipelines for the effort of building 1. Now there probably would have been overruns on that 1 too, so let’s say 2 pipelines for the price of 1. That wasted productivity could have built schools, roads, hospitals, an aircraft carrier, who knows what. And productivity is not like money; you can’t print more of it. Once it is gone it is gone.
***********************
Sounds quite right to me assuming there was actually a big inefficiency caused by government.
I agree, It’s not money that’s the real waste. It is the human effort and any other wasted resources that could have been doing something more useful
———-
Well you did not answer the question.
All you did was perpetuating that government enterprises are inherently less productive then private ones, due to the absence of the profit motive.
I’ve worked in private companies all my working life, and let me assure you, that there is plenty of waste there, too.
Every case gotta be judged on it’s own merit.
Parkinson’s Law was originally derived from studying government bureaucratives, but modern economists are now also applying it to profit based companies.
A coincidence today with Doug’s reference to a spider.
A friend emailed me a photo of a destroyed house, off its foundation, tipping wildly toward its yard. Windows broken, porch and stairs ripped from the building.
Printed in large white letters on what remained of the roof: GOT THE SPIDER!
Trudeau promised in his elections platform that he would raise the student loans repayment threshold from the $25000 minimum wage earner to $40,000
Guess what?
The threshold is still at $25000 a year! A full time minimum wage earner makes $30,000 a year!
Why did you take on student loans to work for minimum wage?
You are PAYING Trudeau to take on debt while working MINIMUM WAGE. I repeat.
You took on STUDENT LOANS debt to pay it as a wage slave on minimum wage.
It’s time we write to our MPs. Remember Adam Vaughan was celebrating the unaffordability of Canadian homes, citing it as good for foreign investors.
by the way. the emergency act is already implemented. how else would police be able to restrict access to the entire downtown core of Ottawa? the act has helped police push this hard. and, if i’m wrong, then the cries of tyranny are pretty funny/sad. i’m not wrong.
@35 Cuke
“in a democracy they must be ELECTED to have an influence on policy and legislation.”
And… there was an election less than 6 months ago. Huh?? Maybe they thought “election” was something guys get when they inhale Viagra. (joke)(I hope)
Investing comment #1: There’s got to be one somewhere in here; maybe it’s just “work, (drive trucks is fine), make money you’ll be happy … don’t work, laze about, get duped by others, and, you’ll loose your truck, hot tub, and look like something Viagra affects”
(hope that’s ok to say the above; my partner, who is very familiar with the practical uses of trucks, wondered how these guys could sit there when there’s VERY good $$ to be made driving these days)
Investing comment #2: with money behind you, you too can rhyme “Orange” with “Blorenge” – the mountain in Whales – because you’ve been there. Beer’s better there, too. ;-)
Well…if Putin invades, the worldwide equity markets will tank! It might be short-term of weeks or even months, but the recovery will take time. Nobody will give a crap if corporate earnings are up—not when fear sets in. But if Putin stands down and really pulls forces back, the markets will soar.
RE: However, when the yields invert, investors are signaling that they have less confidence in the economy and are shifting more into longer-dated Treasuries thus subduing their yields.
=======================================
How reliable is this inversion “tell” when central banks now have a huge influence on the yield curve? Could it be that this indicator is no longer reliable because of that?
Now make something rhyme with orange.
Door hinge
Well , it looks like the over reaction Emergency Measures Act has motivated more people to protest across Canada.
https://www.cbc.ca/news/canada/british-columbia/bc-vaccine-mandate-protests-feb-19-1.6358397
Using a sledge hammer to kill mosquitos… sometimes bring swarms of more mosquitos…..
#35 cuke and tomato
Have you EVER in your life done anything outside of societal norms buddy – you sound like sliced Wonder bread bland – your a good little mouse that drank the koolaid early in life and just does what the Man tells you to do Day In Day Out like robot zzzzzzzzzzzz – some life
#46 Cuke and tomato licker
BOOM BABY – excellent my friend
#35 cuke and tomato
Hmmmm you know I’m starting to think you are a genius troll you big softy lol – your posting all this “Mr. Rogers” family stuff and taking the piss out of us – well good sir you are a Master troll you crazy little muffin, keep telling us about your “ perfect life” nudge nudge wink wink
If you’ve heard Tamara Lich speak, it’s obvious she’s not high up there on the IQ level. So I guess it should not be surprising when in her recent court hearing Daniel Lich (Tamara’s husband) mentions his ‘1st ammendment rights’ and then questions whether or not the Emergency Act is legal.
I’ve yet to hear an articulate thought from even a single demonstrator. It’s kind of embarassing that stupid people took over downtown Ottawa for 3 weeks. Imagine what smart ones could do.
Faron –
The Emergencies Act allows for immediate invocation, then 7 days of debate (not counting Friday when they closed the Parliament) and then passage? By the House/Senate, not, as usual debate first.
Raises the question of what happens if the
Act doesn’t get passed…then what about the people whose bank accounts got frozen?
#41 Baba Novac on 02.19.22 at 5:00 pm
Thanks for another thought-provoking post, Doug!
Seeking to take your thought process further in the context of the B&D portfolio promoted by your team, what would be the (high-level direction of) adjustments to such a portfolio if the inverted yield curve were to occur?
And also, what would be the general duration for making such adjustments to the B&D portfolio after an inversion (if it were to occur)?
Many thanks, again!
—-
An inverted yield curve isn’t irrefutable evidence of an upcoming recession, but it shouldn’t be ignored either.
We had already lowered portfolio risk in 2018 by adding a low-volatility equity ETF and removing a high-yield bond ETF, so we didn’t make further changes in 2019 after the inversion. However, if we’d known Covid was coming so quickly…well, we would have done more.
Hindsight.
—Doug
#35 cuke and tomato picker on 02.19.22 at 3:43 pm
What’s this “we”?
Do you have a mouse in your pocket?
Perhaps your Hallmark stories are not that bad after all.
Certainly better than your political and current affair viewpoints.
Yes, 170 of them have been arrested, and 53 of their trucks have been towed. I’m amazed that you didn’t participate in the occupation! You didn’t, did you!? :P
@#72 Observer
“I’ve yet to hear an articulate thought from even a single demonstrator. It’s kind of embarassing that stupid people took over downtown Ottawa for 3 weeks.”
+++
True enough.
As the old saying goes, ” Best to the thought a fool than to speak and remove all doubt…”
Trailer trash with nifty Canadian “flag capes” and or “hockey stick flag poles” warbling O Canada off key while spitting invective at the media…..
The only thing missing is jars of rotten Maple syrup being tossed at the authorities.
The cliche’s are too many to mention.
( China’s flag manufacturers take note. There is a shortage of flags in Canada, please make more and send asap.)
I think the rest of the world is having second thoughts about immigrating here…
And this is all happening in sub zero temps.
Wait until spring and summer when more of these protesting groundhogs come out.
Gas hits $2-3 a liter.
Food keeps going through the roof.
Housing and rental prices?
That’s just the icing on the inflation cake….
Trudeau and his brilliant, politically correct, advisors…. that expect everything to work perfectly in their perfect world….don’t have a clue how to deal with screaming, angry mobs.
Well. they kicked the hornets nest and they haven’t seen anything yet.
One wonders if the Liberal Party will have the guts to give him the hook when his polling numbers hit Mulroney-esque rock bottom.
Chrystia Freeland stepping in as “leader” while pulling a Kim Campbell and loyally falling on her Liberal sword for a plum political appointment later in life…..
Ambassadorship to Ukraine would be a fitting round off to her CV.
A clean sweep of the Liberal decks as it were.
Banished to the Opposition benches for at least a decade?
The Trudeau name never spoken publicly again.
( Anyone heard from Mulroney lately? Its been almost 40 years…)
NDP take note. If you stand too close to the fire during a weenie roast…you will get burned.
I like your analysis and insights. But recently, in one of your entries, you argued that rate reset preferreds yielding at least 4 percent is a good investment. Do you not think that banks are very soon going to offer 4 percent on their short term cashable GICs. Are banks preferreds better than their GICs with the same yield.
Today’s steerage section is more evidence that comments should be scrapped on this blog. Why can’t you guys stick to the topic instead of spewing your fringe opinions?
#35 cuke and tomato picker on 02.19.22 at 3:43 pm
WE support Trudeau, Freeland…
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Fixed.
“Now make something rhyme with orange.
—Doug”
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Donald Trump
https://www.vanityfair.com/style/2019/02/trump-does-his-own-makeup
Uh huh…I knew you’d like it!
You are absolutely right. Bringing in the Emergency Act after 3 weeks of protesting was just wrong!
It should have been brought in on day one.
As for poor Lichy poo. Grade 11 dropout I’m told. She just wants to go home to Alberta to be with her kids and husband. She had that chance all along up to the last minute but chose not to take that option.
Now she gets to spend a long weekend rotting in her Ottawa jail cell. Courts are closed tomorrow. And now she has no money to even fly home since her accounts were closed.
#72 Observer
I’ve yet to hear an articulate thought from even a single demonstrator. It’s kind of embarrassing that stupid people took over downtown Ottawa for 3 weeks. Imagine what smart ones could do.
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What’s embarrassing is how local authorities – municipal cops and provincial cops – were totally inept at clearing a few blocks of trucks parked in a city. Useless flat foots. Keystone Kops.
If trucks parked on city streets can invoke the Emergencies Act, imagine what would happen if we ever had a REAL emergency.
If this was a BLM protest, Trudeau would have let Ottawa burn down while taking a knee in solidarity.
DELETED
#48 Another Deckchair on 02.19.22 at 5:30 pm
“Now make something rhyme with orange.
—Doug”
I once was at the top of The Blorenge
walked up with a beer and an Orange
when lo and behold
one one ledge it was told
I rolled my Orange down t’ Bolrenge.
Hey, do I win some free financial advice?? :-) :-)
———-
Yes, in fact you do….
Don’t quit your day job!
The finance minister literally said they will keep the ability to seize financial assets during and after the Emergencies Act!
Coorelation of S&P Earnings to S&P Level
For example, S&P 500 earnings and the S&P 500 Index are nearly 95% correlated.
********************************
That’s to forward earnings estimates as noted. Hmm that’s almost perfect correlation. Sorry, but I am a bit skeptical of that. Would that be annual data? Graph shows about 26 years of history. Presumably daily data would show a lower correlation than annual?. If it’s indeed 95% correlated on an annual basis, that is mighty impressive indeed. Even more impressive if it is daily S&P index level data.
Actually the graph shown does not look like anything close to 95% correlation to me. But I will fully admit my statistics courses were a long time ago.
Sorry to be a Skeptic
P.S. When two growing lines are plotted on two different scales, the beginning and end points can always easily be made to match up. So the fact the two lines in the first graph above coincide at the bottom and at the top means absolutely nothing.
The correlation is driven by how far the lines deviate along the way. Which in the graph appears to be a fair amount of deviation from time to time. Yeah, I don’t quite see 95% correlation although indeed it is a high correlation. Yeah I know the answer is take it up with the source who is “Dynamic” but it is Doug who says it is a 95% correlation, right?
#37
This is what the finance minister said.
“In terms of the financial instruments which our government is using right to act against these illegal blockades and illegal occupation, we reviewed very, very carefully the tools at the disposal of the federal government,” said Freeland.
“We used all the tools that we had prior to the invocation of the Emergencies Act and we determined we needed some additional tools.”
“Some of those tools we will be putting forward measures to put those measures permanently in place.”
It is on the record in front of everyone, the finance minister wants the permanent measures in place to seize all financial assets without courts.
Of course not. She referred to Fintrac and AML provisions with regard to crowdfunding. Makes sense. Stop being a drama queen. – Garth
Just grabbed a membership to the Federal Conservative Party. Never joined a political party before.
My calculus is that contributing to the Conservatives is the only way to protest Trudeau and not end up with a frozen bank account or in jail.
What a sick and sad country Trudeau has brought us.
FT
@#79 macduff
“Why can’t you guys stick to the topic instead of spewing your fringe opinions?”
++++
We do it just to annoy you.
No other reason.
Been a lot of wind and drifting snow here in southern Ontario, the Griz handled it with ease. I’ll miss that beast when it’s gone.
But, gone it will be, along with several other pcs of equipment and toys. These are the days to make preparations for Post-Trudeau Canada where things just keep getting worse. The recent protest in Ottawa only highlights what we already knew, we’ve got a brainless nose-honking clown twit douchebag dunce running the country. Best not disagree. LQAM is in effect. I’ll keep my taxes, thanks.
Future Canada will be a place most under 40 today will be planning to leave. It’s just not worth the price. At least not for those regular folks who were born here. We’re headed for a nation utterly dependent on exploiting newcomers, and fleecing anyone hoping to own a home and start a family. Plus we evidently like punishing anyone who dissents.
I won the lotto having got a life on the go before Trudeau was elected, I’ll hang around to watch the show and pay little for the privilege thru avoidance and preparedness. From here on in, it don’t matter who’s in power. Trudeau has single handedly wrecked Canada, there is no fixing it now. Just too much damage. We got just what we asked for.
Now, as the curtain falls; let me raise a toast to Boomers, Gen X and early Mils. We’ve won. Everyone else loses in Canada post Oct 2015. Our B+D’s lurch upward, our house values skyrocket, hell – even our used trucks and ATV’s are now winching in tax-free gains. Yet, the dissolutioned youth and immigrants vote for our enrichment.
That’s hard to beat homies. Give thanks. Trudeau is a nimrod, but us old-stockers got a hell of a fat consolation prize for dealing with this embarrassing pr!ck. I’ll take it with a smile and a wink – while firing up the popper.
Any more comments with such childish name-calling will be deleted. This just weakens your argument. – Garth
This won’t ease the situation…
https://ottawa.ctvnews.ca/sell-towed-trucks-to-pay-down-costs-of-policing-convoy-protest-ottawa-mayor-suggests-1.5788859
I think somebody here on the comments inhaled too many twactor diesel fumes.