Inflation nation

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RYAN   By Guest Blogger Ryan Lewenza
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I’ve been in the investment industry for nearly 25 years and in all those years I’ve never seen such an extreme focus on the monthly US inflation report as we’re seeing right now. One decimal point can send the markets careening lower, which is what we’ve seen since the inflation report release last week with the S&P 500 falling roughly 10% in a week.

Over the last decade the US inflation report has generally not been a market moving event due to the fact that inflation has been contained and low for years. Well, we live in a new world today with US inflation reaching the highest level since the early 1980s.

In May headline US CPI rose 1% m/m with food and energy prices being the main contributor. On a y/y basis CPI increased 8.6%, surpassing the 8.5% peak from two months ago. About 1/3 of this was due to soaring energy and food prices. Energy, for example, is up 34% y/y while food prices are up 10%. This is in part due to the war in Ukraine as we’ve seen oil and grain prices surge following the invasion. So not only are innocent Ukrainians dying as a result of this senseless war, it’s also destabilizing the global economy via higher commodity prices.

Following this negative report we saw two key fallouts.

First, expectations rose for even larger rate hikes. The Fed was expected to hike 50 bps at this weeks Fed meeting but with this unsettling inflation report the Fed came out more forcefully, hiking the Fed Funds rate by 75 bps – the first 75 bps hike since 1996. Following the Fed meeting and rate hike, the futures markets have now priced in another eight rate hikes by the end of the year with the Fed Funds rate closing the year at 3.5-3.75%.

Second, the stock market negatively reacted to the inflation report and rate hike with the S&P 500 declining another 10% this week pushing it further into bear market territory.

So that’s what got us here.

As I’ve been saying in our weekly client calls and in these missives, we need clarity on both the inflation front and the Ukraine war before I see the markets stabilizing and moving higher. I believe the markets will remain choppy and volatile until the Fed ‘pivots’, meaning, they signal they are close to the end in hiking rates, which I’m expecting later this year.

One factor that will dictate when the Fed ‘pivots’ is future inflation levels and on that front I’m seeing some early developments that could portend a peak of inflation in the second half of the year.

First, a key driver of the current high inflation has been due to Covid and how billions of consumers overnight shifted spending from services to durable goods. Think bikes, patio furniture and new appliances.

This can be seen in the chart below where I calculated the change in spending from US consumers. Since the pandemic hit in early 2020, US consumers ramped up spending on consumer durables, which is up over 20% while spending on services is basically flat over the last few years.

With the virus losing its punch or virulence and the pandemic is moving into a new endemic phase, I see a major shift in consumer spending away from durable goods and back to services. This lower demand for durable products could help to alleviate some of the inflationary pressures that we’re currently seeing.

US Consumers Switched Purchases to Durable Goods

Source: Bloomberg, Turner Investments. Note: Indexed to 100 as of January 2020

Second, I believe this shift has already started, which can then be seen in things like lumber prices with prices down over 50% ytd and steel prices down 24% since last Sept. Or take a look at the contrast between Peloton sales/stock price and US gym membership numbers, which have recently recovered to the pre-Covid levels. The shift back to services has begun and this could help to address some the supply chain issues we’ve seen.

Third, Milton Friedman, a prominent economist from the 1970s said “inflation is always and everywhere a monetary phenomenon”. Well, money growth, as defined as the change in M2 money supply, has slowed from 27% y/y to 6% in the last 2 years. All that central bank money printing over the last few years has contributed to the inflation problems we have today, but this is now reversing, which could help to bring down inflationary pressures.

US Money Supply is slowing Big-time

Source: Bloomberg, Turner Investments

Fourth, with respect to the supply chain issues I’m seeing some positives on this front. Freight rates have dropped dramatically in recent months. For example, the cost to ship goods from China/East Asia to the US have dropped 30-40% in recent months and below is the Baltic Dry Index, which is an index of average prices paid for the transport of dry bulk. It’s down by roughly half since last October when the supply chain issues were at their worst. Also we’ve seen delivery times for manufacturers improve, which is another sign that things are improving on the supply side.

Baltic Dry Index is down by half since last October

Source: Stockcharts.com, Turner Investments

So across a broad swath of inflation indicators we’re seeing positive signs that inflation may be peaking. If inflation does peak in the second half of this year then this will be huge as it will allow the Fed to slow its interest rate hikes later this year and possibly provide that needed ‘pivot’ for stocks to then start rallying again.

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

 

122 comments ↓

#1 LewenzaCountry aka Prince Polo on 06.18.22 at 10:32 am

With all these price drops, it sounds like it might be a great time to buy a new deck! What do you think of the theory that most services consumers are going all-in on a 2022 vacation; after which, belt-tightening commences, demand falls off a cliff, and prices abate?
Signed,
Just another armchair economist who foolishly thinks he knows better than the Fed.

#2 Dharma Bum on 06.18.22 at 10:45 am

Not to worry.

Gas is so 2021.

Elon will save us all.

Electric cars for everyone!

All the treehuggers will finally be happy because the environment will now be perfect and there will be no more climate issues.

But then what will the snowflakes obsess over?

#3 TurnerNation on 06.18.22 at 10:46 am

Parents, don’t let your kids become Blog Dogs.

—-
Weekend Deep Dive. How did we get here? An insidious halter indeed. The yoke’s on us alright.

2019: TikTok. First I’d heard, was on this weblog. And it did not feel right. Tick Tock…ominous, like a countdown (into 2020 it was).
Their logo is basically a sigil. Something behind it.
https://en.wikipedia.org/wiki/Sigil
Esoteric but so much is these days.

2019: The “Minister of Middle Middle Class Fairness” was announced. Sheer mockery, in our faces, of what was to come in 2020-21 with the destruction of small business, livelihoods, firing over medical treatments. Tell me they didn’t know. With their big Grit-eating grins.
https://en.wikipedia.org/wiki/Minister_of_Middle_Class_Prosperity

2019: The following companies began trading on a stock exchange via IPOs:
DoorDash, Zoom, Lyft, Uber, Pelaton.
Within a few months each would rise to unimaginable heights (and wealth).
Who’d like to try and convince me this was mere happenstance — before the war was kicked off 03/20?

2020 Q1: Banning plastic straws. All over that one photo — it sold us all. Yep that turtle. A small move but priming you for new control over every area of your life. A month or two later you’d be forced standing 6-6-6 feet apart outside in the cold in front of your grocery store. Back in the U.S.S.R.
(Now you cannot walk 6 week without tripping over medical waste outside)

January 2020: The term “anti vaxer” was heavily introduced into the media. Who dat? I’d never heard of such a thing. What timing. Tell me again.
CBC of course, look at the dates:

“Inside the anti-vaccination movement: CBC’s Marketplace …https://www.cbc.ca › marketplace-cheat-sheet-1.5431394 – Jan 19, 2020
Anti-vaxxers exposed: Hidden camera investigation …https://www.youtube.com › watch
Feb 21, 2020
I’m Not Vaccine-Resistant or an ‘Anti-Vaxxer’ – CBChttps://www.cbc.ca › view › vaccines-canada-2020
Jan 30, 2020″

#4 David on 06.18.22 at 11:04 am

The green initiatives beloved of left-leaning politicians have caused rampant inflation in the energy sector. Biden’s cancelation of Keystone XL is only the most glaring example. Ironically akll of this has been a boon to the oil industry which has seen their profits soar as the price of oil goes up. “Putin inflation” would be better termed Biden inflation.

#5 Joe on 06.18.22 at 11:06 am

Inflation gradation

#6 crowdedelevatorfartz on 06.18.22 at 11:11 am

Interesting stats.
Good to see some of the consumer numbers stabilising.
It’ll be interesting so see how quickly fuel and food prices react over the next 6-12 months.
Putin’s “romper stomper” action in the Ukraine and a crappy spring in North American farming doesnt help.

#7 Truthy0 on 06.18.22 at 11:13 am

With the baltic freight index you chose a keen market while not focusing the Shanghai Freight Index to see that freight volume and freight cost is still highly inflated to pre-covid. You are still getting nominal rates of $20,000 USD per container from Shanghai to Toronto. Baltic Freight Index is more indicative that Europe is in a dire situation.

If anything Chinese exports are currently being impacted by the bull whip supply chain effect. But China has been mitigating this impact with their 2nd covid lockdown. If anything shows the wisedom and tenacity of the Chinese party understanding geopolitical ramifications if they didn’t.

#8 BC Doc on 06.18.22 at 11:17 am

This post isn’t related to Ryan’s article.

I’ve been reviewing some of my previous core ETF holdings these past few weeks. Currently, I hold VXC-T (all world except Canada equities), VCN-T (Canadian equities), a small position of VT-N (global equity) and BND-N (US aggregate bond fund). In the past, I held VAB-T (Canadian aggregate bond ETF) and VSB-T (Canadian short duration bond ETF). I haven’t held either of these funds in a couple of years as they have shown a tendency to zig while the equity market is also zigging, whereas I want an asset class which will zag!

My findings:

VXC-T. Down 21% from its end of 2021 high.

VT-N. Down 22% from its high (January 2022).

VCN-T. Down 14.4% since is March 2022 high, -10% YTD.

VAB-T. Down 20% since Aug 2020, 14.46% drop YTD

VSB-T. Down 9% from its 2020 high, -5.77% YTD drop.

Looking at these core ETF holdings, there is no refuge. Even worse, the bond rout if one holds VAB-T is as bad as the stock “rout” if one is holding VXC-T (whose drop is actually still fairly mild at this point). VAB’s remarkably exceeds VCN and the TSX which are still only in correction territory.

A lesson I learned back in March 2020 is to not trust bond funds. In 2020 they also zigged (instead of zagging) with the stock market, although in 2020 it seemed to be due to lack of liquidity. Currently, they are dropping in parallel with equities due to the rapid rise in interest rates. My take away from March 2020 was that for fixed income holdings, I will either purchase GICs (laddered) or actual bonds (not funds) so that there is a guaranteed maturity date where I will receive my capital back (in addition to the interest/coupon payments).

Cheers,

BC Doc

#9 Grumpy Panda on 06.18.22 at 11:18 am

Pent-up demand for services could be short term. Russia spent 10 years in Afghanistan. Putin likely won’t last that long but they could continue to occupy for a long time, keeping energy and food prices high. Already the media has moved on, Russia has not.

#10 TurnerNation on 06.18.22 at 11:29 am

I believe we are living the end of the Middle Class.
Globally this was kicked off March 2020.
Small businesses were ordered closed. Forced onto CERB, CEBA aka a UBI pilot.
This is WW3 make no mistake. Silent weapons: “Mandates”, Inflation, Interest rates, Taxation, “Non Essential”.

Will a working couple be forced into sending their children to work in the mines, factories and Apple factories? As they do in some countries?
Put it this way, are our global rulers shedding tears over this practice? Don’t kid yourself…we are simply better off tax slaves. Next up will be taxation of principle residence gains.

.Enbridge to raise natural gas prices by as much as 23 per cent July 1 (thestar.com)


— We were to be so healthy, they listened to their government. Well people are talking now.

.Saskatchewan saw more COVID-19 deaths in first 5 months of 2022 than 2021 (cbc.ca)

#11 David McDonald on 06.18.22 at 11:36 am

Thank you for the interesting statistics. It’s reassuring to hear that the sky is not falling.

#12 Stone on 06.18.22 at 11:40 am

I understand you have a personal bias when it comes to Ukraine, Ryan. Overall, your thesis makes sense to me except for the importance of Ukraine which was bothering me because it seems irrelevant to the inflation equation. They’re not that relevant as far as I can tell. Low rates and gouvernment handouts are the culprit. I guess you can also add in a broken supply chain due to covid (not Ukraine). Gouvernment handouts have stopped and interest rates are rising. That will eventually curb inflation. You say inflation will drop by the end of 2022? Will the invasion of Ukraine be done by then? I suspect it won’t so how do these two items correlate then?

I found this article as to where grains and oils from Ukraine are shipped. Do you notice in the article that food prices were already high prior the invasion and the hope had been prior to Russia invading that Ukraine might help drop prices?

https://www.bbc.com/news/world-europe-61583492

I’m happy for you to show it otherwise. I’ve only posted one article so who am I state that part of your thesis is incorrect.

As for Ukraine, it’s sad to see the unnecessary suffering going on there. It’s also sad there are many other wars going on in other parts of the world nobody really seems to care about. From an economic standpoint though(not an emotional one), they’re all irrelevant though.

#13 Philco on 06.18.22 at 11:45 am

“like lumber prices with prices down over 50% ytd”
It Does not and will not translate to 50% at the store folks.
Feb a 2x10x10 was $33.50 at HD now $29.34.
All overhead and input cost haven’t gone down.
I’ve got a mill and it has not gotten cheaper to log, move, cut and deliver.

#14 Faron on 06.18.22 at 11:47 am

Bitcoin, “the hardest money” below $19k and falling past the 2010s high water mark.

Are the bros still “so early”?

#15 Faron on 06.18.22 at 11:49 am

@The Regulator

It’s fun when people read my comments then say no one reads my comments.

#16 Doing my Part on 06.18.22 at 11:49 am

Getting to be the last chance.
Get out of bitcoin now, it is going to zero.
You can thank me later.

#17 db on 06.18.22 at 11:51 am

But are the improving signs you quoted possibly contra-indicators? The demand for services vs. durable goods could ease supply constraints (think tourism vs. renovations) however service spending is heavily weighted towards discretionary spending which can be deferred or eliminated which typically happens for folks who are feeling poorer (due to inflation and asset deflation like homes, crypto and equities).
The Baltic Dry Index likewise is often perceived as a leading economic indicator as its decline is often considered as a loss of confidence in economic growth by primary and secondary producers (ag., steel etc.).
Danielle DiMartino Booth (https://quillintelligence.com/) suggests the bellwether will be the near term performance of emerging markets and I would add the disturbing reports of bank runs in China doesn’t exactly bode well.
On the flip-side though preferred share ETF’s and REIT ETF’s are looking slightly tasty and healthier PE’s are never a bad thing.
Booth’s economic take is heavily bearish so it may be somewhat at odds with your take Ryan, especially her 4th quarter 2022 and 2023 analysis.
Very informative post, I really enjoy the back and forth between macro analysis and investment advice.

#18 Sail Away on 06.18.22 at 12:07 pm

Luckily, in Nanaimo, we can:

-run up the local mountains in lieu of gym memberships
-drive almost-free-to-operate Teslas… or bike
-forage wild foods
-carry no business debt since it’s an economical place to operate while charging the same as Van/Vic consultants
-have our pick of talent because lots of people want to live in this gem and since, like Fartz but unlike our competitors, we share profits

No noticeable increase in costs for us. Well, 10% more for employee salaries, but we just bumped fees commensurately or better, leading to plumper retained earnings.

A lot of this flows from strategic choice of location. Similarly, a brother started his undertaking/used furniture/real estate company in an economical location and has been firmly in the black since year 2. Life’s a test. Plan well and score high.

#19 Shawn on 06.18.22 at 12:23 pm

Recession Watch

There has to be lower demand for something when consumers as a population are spending considerably more on gasoline and food.

Even with most people trying to drive a little less the total dollars going to gasoline are way up.

I doubt that consumers as a population can simply draw down savings or borrow more to keep the volume of purchases up.

GDP measures volume of activity at unchanged prices. How can volume not be down when prices are up 8% and wages maybe 3%?

I’ll side with those who predict the U.S. is already in a technical recession as Q1 printed negative and Q2 seems likely to print as a modest decline in GDP versus Q1.

“Real gross domestic product (GDP) decreased at an annual rate of 1.5 percent in the first quarter of 2022 (table 1), according to the “second” estimate released by the Bureau of Economic Analysis.”

https://www.bea.gov/news/2022/gross-domestic-product-second-estimate-and-corporate-profits-preliminary-first-quarter#:~:text=Real%20gross%20domestic%20product%20(GDP,real%20GDP%20increased%206.9%20percent.

#20 Philco on 06.18.22 at 12:24 pm

#8 BC Doc on 06.18.22 at 11:17 am

There was lots of cheering here for a housing crash. I just kept my mouth shut. Everything looked priced to perfection..
There was a huge probability of widespread carnage incl Mr Market.. Here we are.

I’ve been in high levels cash for a while. Now can buy in ie DIR/UN ect cheap and looks like capitulation to me? I dipped my toe in the water on the first slide but bailed on the rally.
When people get foolish leave the party I say. Nothing wrong with sitting on cash for a long time.
Here’s a possible scenario?
https://thetrendletter.com/2022/06/17/market-notes-june-17-22/?utm_medium=email&utm_campaign=Todays%20charts%20copy&utm_content=Todays%20charts%20copy+CID_244d7ee6ff33b2ceaa9dfabb0d4828c0&utm_source=Email%20marketing%20software&utm_term=See%20Todays%20Notes%20%20Charts

#21 Jaypow on 06.18.22 at 12:26 pm

It can take 6-12 months for fed action to wash through the system.

Translation – it can take that long for inflation to stop rising, not come down.

But, the perfect storm we are in is hitting consumers and the economy faster. Not the fed.

Example – look at the fire sales in malls. They need to dump excess inventory because it isn’t moving like they anticipated and put in orders for 6 months ago because 30% of Canadians are using savings just to buy food.

Next up?

Freeland tipped her hand answering questions on pumping $8.9 billion into the system – she conveyed darker times are coming, it’s not going to be over soon.

Prepare for a dark winter.

#22 Quintilian on 06.18.22 at 12:26 pm

“[Baltic Dry Index,] which is an index of average prices paid for the transport of dry bulk. It’s down by roughly half since last October when the supply chain issues were at their worst.”

True, but it is trending up again.

As for M2 spectacular growth as reflected and connected to US Gove Dept to GDP ratio is huge and it won’t rebalance in just a few months.

Inflation is going to the guest that will over stay its welcome well beyond 2022/2023

#23 tkid on 06.18.22 at 12:28 pm

While I really hope you are correct about the pivot, I don’t think consumer appetite is solely responsible for inflation.

There is the Ukraine situation, but there is also climate change to deal with. There are rumblings that this year’s crop harvests will be a fraction of their norm. I don’t see wheat & corn prices falling or even remaining steady at their current prices in September.

#24 Quintilian on 06.18.22 at 12:28 pm

*Gove Dept to GDP

Should read: Gov Debt to GDP ratio

#25 Gio on 06.18.22 at 12:39 pm

$3 a liter gas is just around the corner. It may take a few months but it is coming soon. Also, 7% mortgage rates are coming in the next few months also maybe early 2023 and 5.25% to 5.5% GIC, term deposit, RRSP, TFSA rates.

#26 Reddy on 06.18.22 at 12:54 pm

Nice post Ryan. I’m hopeful talk of inflation will subside. That said, hasn’t this blog always told us to do the opposite of the herd? (hopefully I’ve understood that correctly) and if so, shouldn’t we be planning and acting as if there wasn’t inflation?

If we do have inflation, I’m not sure sure higher interest rates are that much of a problem, because this could be passed on to tenants. And I haven’t seen any sign of falling prices in my neighborhood, in fact it’s been quite the opposite (Gatineau).

With houses and triplexes continuing to increase in value, the opportunity to pass on the higher interest payments to tenants, this can be win-win for landlords in my neighborhood. Ya, real estate is local and I’m just reporting from my neighborhood.

Finally, I hope and and pray for the Ukraine.

#27 Ponzius Pilatus on 06.18.22 at 12:54 pm

About gas prices:
A few days left to start of Summer:
And Regular is dropping in the Lower Rainland.
Diesel is up.
Maybe it is transient?

#28 Ryan Lewenza on 06.18.22 at 12:56 pm

Stone “I understand you have a personal bias when it comes to Ukraine, Ryan. Overall, your thesis makes sense to me except for the importance of Ukraine which was bothering me because it seems irrelevant to the inflation equation. They’re not that relevant as far as I can tell.”

The war has exacerbated the inflation problem by pushing oil and gas prices higher along with grain prices. Ukraine accounts for 11% of the world’s wheat production and 17% of corn. Clearly with the ongoing war this has basically shutdown farming and the movement of these key agricultural commodities. Moreover, Russia has implemented a blockade in the Black Sea stopping any ships coming in and out so what grains Ukraine has to ship is being stopped. Russia has said they’ll end the blockade when US/Europe ends their sanctions. Sure I’m biased given my background but it seems obvious to me who the aggressor is in this battle and who is responsible for so much death and destruction in Ukraine and now global food shortages. – Ryan L

#29 Shawn on 06.18.22 at 12:59 pm

Money Supply?

I will always contend that money and the money supply are very complex to understand.

Consider that Money supply M1, M2 and M3 are money in CIRCULATION and all EXCLUDE the reserves that commercial banks hold at the central bank. In other words they EXCLUDE the stuff the central banks “printed” to buy bonds from banks. Only if the commercial bank withdraws those reserves and loans them out are they adding to money supply in circulation – which no doubt did happen to some degree.

The Monetary Base includes only coins and notes in circulation plus the commercial bank reserves at the central bank.

I believe the Canadian central bank has argued that increasing the monetary base by bond purchases is not printing money as long as the created reserves remain on deposit at the central back. Look at the bank of Canada balance sheet. The commercial reserves have fallen a lot (over half) since the peak but remain very high.

https://www.bankofcanada.ca/rates/banking-and-financial-statistics/bank-of-canada-assets-and-liabilities-weekly-formerly-b2/

#30 Quintilian on 06.18.22 at 1:02 pm

#19 Shawn on 06.18.22 at 12:23 pm

As I said too many times before, the economy started to slow down last quarter of 2019.

Then along came COVID, and for better, or for worse, politicians put on their hero leotards.

#31 Ponzius Pilatus on 06.18.22 at 1:08 pm

Global trade is now so interconnected that maybe sanctions and embargoes don’t work anymore.
The 70s oil crises was driven by an unified Opec, led by the Saudis.
Nowadays, the States are mostly self sufficient, and there are alternatives, and cars are much more efficient.

#32 Søren Angst on 06.18.22 at 1:23 pm

Russia cuts Italia gas supply by 50% of 63 Mcm/day from Nord Stream 1. (via Germany).

France NO supply since June 15 via Germany – managed to make up losses from other sources. No numbers from Germany.

Slovakia same as Italia at 50%, Austria cut as well, but no numbers provided by them.

Poland, Bulgaria, Finland, Denmark and the Netherlands have already had their Russian gas deliveries suspended after they refused a demand to pay in Russian roubles.

Some GOOD news is the EU as a whole currently 52% full, just below the five-year average and above the 43% seen at this time last year – reservoirs for Winter. A lot of imports from the USA has helped *.

https://www.bbc.com/news/business-61838905

In Italia, a state of alert may be declared next week – rationing.

https://www.ilsole24ore.com/art/dopo-taglio-forniture-gas-russo-italia-lo-stato-allarme-AEj3khgB

In the steady hand of Mario Draghi I trust.

————————

War effects starting to get real here in the European Union. Could put the EU into recession this year.

More uncertainty.

Less likely Mr. Market rallies any time soon.

* LNG could have come from you too Canada but alas…

Russia delenda est.

#33 Diamond Dog on 06.18.22 at 1:36 pm

I’ve been in the investment community for zero years (outside of investing of course, been investing for 23 years). I’ve never seen such a focus on inflation either but its necessary! CPI is 8.6% but it’s a cooked number and we should talk about why, it’s important for readers to understand it.

“Real estate metrics make up 1/3rd of U.S. CPI while making up a little over 40% of core. Prior to 1983, BLS calculated CPI: Shelter based on housing prices, mortgage rates, property taxes and insurance, and maintenance costs. Not coincidentally, housing prices tracked closely with CPI up to 1983.

Post 1983 changes to BLS calculations in housing costs captured just the implicit value of services that homeowners “consume” from their own homes—not the asset value of the house as an investment. It is calculated using a subset of the same rental data as the CPI: Rent index, weighted by the price that homeowners think their home (unfurnished and without utilities) can be rented for monthly.” – #145 Diamond Dog on 06.16.22 at 8:29 am

In other words, the Fed can take numbers from a Chinese fortune cookie and make up whatever story they want… which is exactly what they did. Today, the Fed through post 1983 metrics is suggesting housing costs making up 1/3rd of CPI is 5.5%. How does this square with a national rent average above 17% yoy, housing valuations 20% higher and maintenance costs that would follow U.S. producer goods inflation at 16.8%? (yup, that high)

Quick answer, it doesn’t square. If we used pre 1983 metrics with CPI just based on a cooked number in housing alone or 70’s metrics, CPI would be running closer to 12.4%. With a current Fed rate at 1.5 to 1.75% to address it. What I’m saying is, CPI should be much higher and more reflective of the housing bubble the U.S. is in, a housing bubble that has blown up under Powell’s watch. He can talk about energy and war and all CB’s talk about to bait and switch, but he owns this housing bubble, that’s on Powell.

Some quick things to note and then I’ll move on to Friedman. Lumber costs have dropped because housing starts have fallen off a cliff. U.S. 30 year mortgage rates doubling since the start of the year might have something to do with it. Steel has fallen because of the property bubble implosion in China and has been down since before Christmas. We can talk about individual commodity swings and supply/demand shocks all we want, but its the aggregate that counts. “What is the money supply doing in relation to price?”

The mind of an economist like Friedman thought so which led to his saying, “inflation is always and everywhere, a monetary phenomenon”. With Friedman, he didn’t get lost in the weeds and distractions of supply/demand shocks and went straight to monetary policy. Why? history and data.

If readers have the time, please take the time and watch Friedman at his best. I’ll go so far as to say that if you want to make money as an investor by not missing the next “opportunity” going to play a Warren Buffet card here:

https://www.youtube.com/watch?v=63oF8BOMMB8&t=387s

Friedman’s lecture is required viewing and I’ll explain why:

https://www.youtube.com/watch?v=B_nGEj8wIP0&t=3286s

As an investor/manager becomes more seasoned with macro economics, the U.S. Federal Reserve will become more important as time goes on because of the impacts the Federal Reserve has on the U.S. economy and world as a whole. Their decisions on monetary policy and credit decide the future of stock and bond markets.

Of course, they can’t control everything but they control the money supply and to a large degree, the cost of borrowing. It’s not as simplistic as this, it’s a democracy with politicians choosing the heads that run U.S. institutions. Politics is involved. Friedman himself was a “Libertarian figure” of which I didn’t agree with his late political views on everything but it doesn’t detract from the fact that he was a brilliant economist and what he said in the video above is right on point.

Take note for example, what Friedman says in the 40 minute mark of the video above where Friedman speaks of the time delays between increases (and decreases) in the money supply and inflation. Friedman speaks of a 2 year delay between an increase in the money supply and inflation. Similarly, there is also a “2 year delay” when you decrease the money supply and see inflation come down.

Is he right? It’s compressed between 18 months and 2 years in more recent times due to CB’s buying bonds, at least from what I see with broad money, but this is the timeline that emerges with data to back it up.

Take note Ryan, with m2, Friedman suggests that the timeline is 12 to 18 months. To quote Friedman, “an increase in the money supply takes 5 or 6 months to effect peoples spending. People just have bigger bank accounts. Then it takes them a little while to realize it and they start spending it. And then, it’s another 12 to 18 months before that works through to prices.” Friedman was using 100 years of U.S. data and 200 years of data from England in determining the timeline (up to 1981 when he gave this speech?)

When we look at the recent timeline from increases to the broad money supply in 2019 first hitting inflation in 2021, the timeline starts around the 18 month mark, so it’s compressed. m2 (a narrow version of broad money) taking 12 to 18 months, I’ll remind readers of what El Erian (and myself) have said recently. “The Federal reserve was still stimulating the economy with CPI inflation at 7%. (7% in Dec) – El Erian

In early March of this year, the Fed rate was .08% and the Fed was still buying bonds! They had just begun to taper in January and were just stepping off the gas in March. So if we look at the timelines just with m2 at 12 months, we won’t see a drop in inflation until next year. There’s a consumer producer behavior that needs to be broken as well, so we are looking at, if Friedman is correct (he is) a timeline of 18 months to 2 years from the time the Fed shrinks the money supply to the time we see inflation drop in broad money and 12 to 18 months with m2 but like I say, consumer behavior also needs to be broken.

So Ryan, if you look at when m2 drops below 7% (the 20 year average) and add 12 to 18 months, there’s your answer. High inflation is here well into next year, unfortunately. We may not see inflation meaningfully drop until Q2 at the earliest of 2023, likely Q3?

El Erian’s recent fear is that the Fed backs off and pivots. This is why, because you can’t introduce more stimulation and expect inflation to disappear and you have to break consumer behavior. In short, the Fed can’t increase the money supply or inflation will drag on and with it, the wrecking ball of inflation will cause more damage, income inequality and recession.

I’d love to chat some more about future Fed rates, where the dollar will be next year and how currencies across the world will react to higher rates and inflation and U.S. housing because everyone knows I love to chat, but I’m out of time. Enjoy your weekend everyone.

#34 The Regulator on 06.18.22 at 1:42 pm

As a long time reader of this blog, and fairly new commentator, I’ve compiled a totally unscientific study. Going back to June 13/22 – The Reset –
Number of comments per person :
# 1 – Faron : 54 (good job, sport)
# 2 – Crowdedelevatorfartz : 51 (better luck next time)
# 3 – Ponzie : 33 (shorter and more frequent, please)
# 4 – Sail Away : 27 (pick up the pace, slacker)
# 5 – Regulator : 25 (including many deletes)
Since I will no doubt be permanently deleted soon, you guys will have to pick up the slack. To the chagrin of everyone else. lol

#35 Shawn on 06.18.22 at 1:43 pm

Opinion versus Facts

#30 Quintilian on 06.18.22 at 1:02 pm
#19 Shawn on 06.18.22 at 12:23 pm

As I said too many times before, the economy started to slow down last quarter of 2019.

*******************************
Yeah we all know the economy started to slow in Q1 2020, a little thing called COVID, then roared higher in 2021. And now slowing per official reports. Not sure what your point is.

Do you use data for reporting on PAST economic growth (link please) or just make things up based on your personal experience?

#36 Søren Angst on 06.18.22 at 1:44 pm

Well Canada *, if you wanted heat and you are visiting Europa this week, Europa delivers:

In pictures: Europe swelters in blistering June heat
https://www.bbc.com/news/world-europe-61850903

Mind you, you have to consider “la faccia infarinata” source are the English here (Vesti la giubba).

Paesi Freddi wilting. To Italia, “ya, whatever”.

My new A/C is wicked. Low 30’s across the board here in NE Italia for the week.

https://www.ilmeteo.it/notizie/meteo-prossima-settimana-gi-da-luned-ci-avvolger-una-bolla-africana-le-conseguenze-saranno-importanti-101048

“Anticiclone Africano” – Meteo Italia histrionics.

———————

* Sail Away, so, how is that wicked 17 deg C sweltering heat working out for you on your forest primeval sojourns? And rain (imagine that in BC)?

🍁as far as heat goes, you POOR THINGS.

😘 d’Italia.

#37 Danger Dan on 06.18.22 at 2:00 pm

Vehicles are still hard to get. Housing costs haven’t fallen enough to make them affordable but rents are rising anyway. Energy crisis is brewing in Europe and causing LNG price to rise globally.

But at least lumber is going down, maybe we’ll all feel a bit Amish by the end of the summer.

#38 Søren Angst on 06.18.22 at 2:06 pm

Ryan, a lot of uncertainty as you point out and I agree.

I think though that if the US Fed can show rate hikes are curtailing inflation (any time soon), markets will start to heal.

If they can do it with a “softish” landing, a rally will ensue.

Should be obvious by Autumn as they are forecasting 5.2% end of year. 2.6% in 2023.

Though their change in GDP forecast less than inspiring at 1.7% this year and next year…to close for comfort.

Table 1
https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20220615.htm

———————-

Like you I think later in the year, maybe as early as Autumn we’ll know (and see the rally).

As for me, will start buying again in July (A/C and kitchen reno this month) as stock prices are hard to resist.

Hope I am not the only one in Mr. Market that thinks the same (not the reno’s).

#39 Philco on 06.18.22 at 2:21 pm

#4 David on 06.18.22 at 11:04 am
———————————–
Indeed David…..Glaring examples in the EU (Germany, UK ect)
This I posted is worthy of a repeat. May open somes eyeballs.
https://www.ted.com/talks/graham_conway_the_contradictions_of_battery_operated_vehicles

#40 BCWally on 06.18.22 at 2:23 pm

Good article Ryan. What I’m really wondering about right now is the credit situation here in Canada and the US. I would like your take on that in a future article if you care to.
I’m referring to the average consumer in that. Housing markets being either frozen or values falling rapidly, collateral that was there backing lending must be doing the same thing as an example. Credit card usage must be going up to compensate, what happens when it stops?
I’m thinking that might be a decent indicator of where inflation will be heading.

#41 Shawn on 06.18.22 at 2:25 pm

Scroll, scroll, scroll

Diamond Dog, as I think it was CEF who recently said:

scroll, scroll, scroll, OMG scroll, scroll scroll.

People, when your comment is longer than the original main editorial here it’s time to open your own blog.

But I did read enough to see that you are a conspiracy nut when it comes to inflation statistics. To each his own.

But will all those who think house prices should be directly in CPI now holler that Canadian CPI would be lower of they figured in the recent home price declines?

#42 Shawn on 06.18.22 at 2:27 pm

Hey, where’d you all go?

All those who commented for years that interest rates could never rise due to all the debt. Where have you gone? How’s that variable rate mortgage all ya all took out doing?

#43 Quintilian on 06.18.22 at 2:52 pm

#35 Shawn on 06.18.22 at 1:43 pm

“Do you use data for reporting on PAST economic growth (link please) or just make things up based on your personal experience?”

“The annual growth rate of Canada’s real GDP was 1.6% for 2019, a deceleration from the 2.0% growth in 2018. By comparison, real GDP in the United States increased 2.3%.”

https://www150.statcan.gc.ca/n1/daily-quotidien/200228/dq200228a-eng.htm

I don’t have my own research team, so I rely on facts as presented by Statscan.

Perhaps you have better data, if so please provide. Unlike you curmudgeons, I am always open to learning and change my opinion if facts dictate so.

#44 The Regulator on 06.18.22 at 2:52 pm

# 15 – Faron : Oh, did I say I actually read your comments? You’re funny. No, but I am sure I’m not alone.

#45 Bezengy on 06.18.22 at 2:55 pm

A lot of inflation pressure is home grown. Try to get someone to drywall your new build, not happening. (even before the strike) I recently saw a quote for $8800 for installation of 700 sq. ft, roughly $12 per sq/ft. It used to be $3 per sq/ft max. The problem is so bad Ontario now will pay for your training.

https://kitchener.citynews.ca/local-news/ford-government-to-launch-new-crown-agency-to-promote-skilled-trades-4989945

I brought a motorcycle wheel in last week to get the tire changed. The guy told me he has a 3 week backlog. I had to order the thing and change it myself. There are approx. 300k jobs unfulfilled in Ontario and unless we can get someone to do the work some of this inflation isn’t going away anytime soon, and let’s not forget these new hires aren’t as productive as the old experienced guys either. More mistakes means less production and more cost.

btw….I thought I had ordered a HD Dunlop (heavy duty) and it turns out my old Honda now has a Harley Davidson tire on the front. I’m just hoping it doesn’t start leaking oil now.

#46 ElGatoNeroYVR on 06.18.22 at 3:02 pm

#42 Shawn on 06.18.22 at 2:27 pm
Hey, where’d you all go?

All those who commented for years that interest rates could never rise due to all the debt. Where have you gone? How’s that variable rate mortgage all ya all took out doing?
==============
1) Let’s see for how long these rates will stay up
A) once China opens the inflation will pretty much reset to the average in quick fashion(months)
B) the feds tend to overcomensate on rates upswing and induce recessions,that will bring down comsumption even faster

2) my variable is doing just fine thank you ,no changes to payments.At 20% of net income it is cheaper (inlcude prop taxes and insurnace) than renting anything in the GVA so the amortization is meaningless ,if it takes another 20 years to pay or never ,who cares ?

I do see your point for those who have to renew within the next year or two. Still we used to get Prime – 2% in the past when rates were similar so I think the impact is a bit hyped up.

If one can hold on selling for 5 years or can sell like right away at break even than no big deal.

#47 Sentiment on 06.18.22 at 3:04 pm

So, like, more than 90% of stocks declined 5 times in the last 2 weeks.

Can’t find any other example of that in 100 years.

Does that make this the most you know like the baddest biggest sellout in history?

Whatsa gonna go down when the fed keeps raising rates?

#48 Grunt on 06.18.22 at 3:15 pm

Nice read glad to see you paying attention to yankees yapping. If you TI folks need parts for your fancy rides that’ll be a key supply indicator.

#49 Sail Away on 06.18.22 at 3:28 pm

#36 Søren Angst on 06.18.22 at 1:44 pm

Sail Away, so, how is that wicked 17 deg C sweltering heat working out for you on your forest primeval sojourns? And rain (imagine that in BC)?

———-

17 is possibly the best temperature for high intensity activity and dog exercise. 14C for our run up MT Benson today and probably 7C in the cloud at the top.

Climate change has turned this summer into the coldest and rainiest I can remember. Green, green, green everywhere.

#50 Miff Tacklem on 06.18.22 at 3:41 pm

Inflation? Tiff Macklem asks what inflation?

He’ll point out that fuel is cheap enough for a crazy guy to light a woman on fire inside a bus on layover in Kipling Station.

If a homeless person can afford fuel to light fires then why complain about gas prices?

#51 kommykim on 06.18.22 at 3:45 pm

#2 Dharma Bum on 06.18.22 at 10:45 am
Not to worry.
But then what will the snowflakes obsess over?

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

Well, snowflakes melt and are replaced by new snowflakes. These new “right”wing snowflakes get triggered every time they see an EV or JT on TV.

#52 Former cubicle dweller on 06.18.22 at 3:47 pm

Ryan, thanks as always for your insights. Where do you see the oil price heading? Are we near the peak, or is more pain coming?

#53 tkid on 06.18.22 at 3:51 pm

Does the below mean the Fed is forecasting a hard landing, or did someone just plug in numbers to a model made available by the Fed?

the DSGE model forecast is not an official New York Fed forecast, but only an input to the Research staff’s overall forecasting process.

https://libertystreeteconomics.newyorkfed.org/2022/06/the-new-york-fed-dsge-model-forecast-june-2022/

The model’s outlook is considerably more pessimistic than it was in March. It projects inflation to remain elevated in 2022 at 3.8 percent, up a full percentage point relative to March, and to decline only gradually toward 2 percent thereafter (2.5 and 2.1 percent in 2023 and 2024, respectively). This disinflation path is accompanied by a not-so-soft landing: the model predicts modestly negative GDP growth in both 2022 (-0.6 percent versus 0.9 percent in March) and 2023 (-0.5 percent versus 1.2 percent). According to the model, the probability of a soft landing—defined as four-quarter GDP growth staying positive over the next ten quarters—is only about 10 percent. Conversely, the chances of a hard landing—defined to include at least one quarter in the next ten in which four-quarter GDP growth dips below -1 percent, as occurred during the 1990 recession—are about 80 percent.

#54 inflation is rampant on 06.18.22 at 4:09 pm

CPI prints

Dec 2021 +7.04%
Jan 2022 +7.48%
Feb 2022 +7.87%
Mar 2022 +8.54%
Apr 2022 +8.25%

Putin had nothing to do with the current inflation spike.
Convenient to blame Putin, but INFLATION IS RAMPANT.
Inflation spiked in 2021, without Putin.

CENTRAL BANKS are SOLELY responsible for inflation.
Stop making the other things up.
MASSIVE MONEY PRINTING is the SOLE cause of inflation.

Not Putin
Not Supply Chains
Not Durable Goods orders.

#55 cuke and tomato picker on 06.18.22 at 4:21 pm

Everybody has got to eat. The cost to a farmer of all the
things like seed, fuel, fertilizer, water, machinery labor
to plant and harvest plus keeping their machinery and water supply operating costs money. This is for the plant based diet add to that cost of feeding foul, hogs, cattle, sheep etc. Then there are costs of getting things to the farm and off the farm to store shelves. FOOD PRICES WILL INFLATE BE PREPARED.

#56 inflation is rampant on 06.18.22 at 4:36 pm

Justin Mamis would call this market full of circus top…
there are NO bottoms. NO BASES.. ALL TOPS

look at the charts. fundamentals are completely useless.

markets bottom when sectors make BASES.

short of a bear market bounce, this markets will keep going lower. good luck to the bulls.

#57 Quintilian on 06.18.22 at 4:39 pm

#42 Shawn on 06.18.22 at 2:27 pm
“Hey, where’d you all go?

All those who commented for years that interest rates could never rise due to all the debt. Where have you gone? How’s that variable rate mortgage all ya all took out doing?

Here I am, one of those who thought that rates were likely not to rise.

Not because I did not understand the economic argument for higher rates, but because the Central Bankers have been politicalized and thought they would continue on the corrupt political path.

Surely you can see why after suppressing rates for so long for political reasons, Central Bankers have lost credibility.

#58 Sydneysider on 06.18.22 at 4:41 pm

Some say that freight rates have dropped, others not. Do your own due diligence.

https://pbs.twimg.com/media/FVUH01VXEAQOFXb?format=jpg&name=medium

#59 pBrasseur on 06.18.22 at 4:43 pm

Just because M2 growth is getting back to pre-Covid levels does not mean inflation is peaking or will peak soon.

What if pre Covid money supply was already growing too fast (though credit, household debt and government spending, etc…), inflation was already a threat, only it was contained mainly by globalization, the huge emerging countries surpluses and the arrival of millions of new cheap workers in the world economy which drove many prices down, no longer the case, to the contrary China is now an inflationary enhancer.

Second, consumers are still spending like there is no tomorrow, that behaviour will need to change drastically if inflation is to be tamed. No sign of that yet, malls are still packed!

Third, the reversal of the age pyramid is (for now) inflationary throughout the western world and in China. Labor shortages are everywhere and the pressure on salaries is huge.

Fourth, the demands put on the economy by welfare state promises is unsustainable, only permanent stimulus could sustain them it a bit longer. That stops with inflation, a problem nobody can kick down the road.

This will likely eventually lead to a deflationary shock, but meanwhile inflation is here and we won’t get rid of it so easily.

#60 Don Quixote on 06.18.22 at 4:52 pm

Ryan,

Can you give us some insights as to how the newly passed Bill C-11 internet censorship bill will affect this blog and comments?

Canadians will be concerned about free speech considering the impact of the NDP/Liberal governing agreement combined with the willingness of the govt. to freeze our bank accounts

Apparently Parliament did not get a chance to see hundreds of amendments before there was a vote to stop debate on the bill.

#61 The Regulator on 06.18.22 at 4:58 pm

# 15 – Faron : Actually, it’s more like a roll my eyes, what will that scamp Faron say next pity glance. ; ( Or if it’s 10 paragraphs long.

#62 Nonplused on 06.18.22 at 5:06 pm

One data point does not make a trend. I predict inflation will “peak” in 2023 at 15%. But who knows exactly there are a lot of moving parts, including how many 0.75% hikes we get. However there is a lot of new money already in the system that hasn’t been priced in yet.

Meanwhile we will be in recession and probably are already. 3% growth in GDP when inflation is 8% is disingenuous at best. We are looking at a 5% contraction in real dollars. And you have to look at real dollars because a 3% pay raise when inflation is 8% is actually a pay cut once you get to Costco. And if you have to pay taxes on that 3% raise then the situation is actually worse. And you certainly have to pay HST on that 8% inflation so it is worse again.

Yes, inflation can cause a recession. Looking only at the quantity of money being exchanged doesn’t mean much if the purchasing power of that money is going down. You have to look at what the money is buying.
Otherwise we could achieve economic Nirvana with $100 Big Macs and a $50 minimum wage. It doesn’t work that way. To truly understand economics, everything has to be measured at the physical level. “How many Big Macs does an hour at the average wage” is a far better measure than the price of the Big Mac, which is just an artificial measurement device. Money isn’t real. It’s a measurement, like an inch or a pound. But it distorts everything when the unit of measure keeps shrinking.

I put “peak” in quotes when referring to inflation, because we are referring to the year over year gains, not absolute price levels, “peaking”. Absolute price levels will never “peak”. It is not the way our economic system works. The prices aren’t coming down, at least not meaningfully. We can only hope they stop rising so fast. This is the “new normal”.

Remember, the “target” for inflation is 2%. Therefore prices will always rise once you back up and look at the graph from a distance. They will never “peak”.

#63 Summertime on 06.18.22 at 5:10 pm

#50 willworkforpickles on 06.18.22 at 3:36 pm

Pretty much spot on on inflation.

Keep in mind, CPI grossly underestimates impact from rising prices on cost of living. Real rise in cost of living is probably double the CPI.

We will see 3-4 years of 15 % +, most likely 20 % real annual inflation as a minimum, my target total inflation to make the debts ‘manageable’ is 4-6 years of 150-200 %, maybe even 300 % total inflation when compared to the price levels from 2000-2021.

Of course as CPI is severely understated, we will see benefits decreasing significantly to my target of a few loafs of bread a day for average CPP benefits. Or probably a loaf of bread and kilo of tomatoes per day.

Not even gas money.

We have seen nothing of real inflation of necessities yet.

#64 DonQuixote on 06.18.22 at 5:53 pm

https://mediapolicy.ca/

My take (brief look) is that it might cover your blog (it contains images (dogs…but are they Canadian?) ….

It would cover BNN tv…giving the CRTC regulatory oversight…much of the content is American tho…(what is Canadian content?)

And BNN is owned by Bloomberg, so….

And RT (Russia TV) already banned by Libs because we are at war with Russia (not)…

#65 Dogman01 on 06.18.22 at 5:59 pm

Came back from a few weeks in the U.S.A.

The Democrats will be swept out at their next election. The attribution of Inflation to the Biden Admin was the opinion of everyone I encountered. There was an over whelming acknowledgment that high energy prices a huge factor in high food process and that high energy prices are due to a “green fanaticism’ of those behind the scenes actually running the Biden Admin.

Many of the gas station shad this Sticker of Biden pasted to the Pump with him pointing to the Price saying “I did that!”.

Their November election will be landslide.

#66 tbone on 06.18.22 at 6:10 pm

Was at Sherway Gardens this afternoon , lots of parking
and mall was not packed . Fathers day sales everywhere.
Tell tale sign we are slowing down , the Apple store did not have a line up and store was only half full.
Its usually a zoo over there .

#67 Penny Henny on 06.18.22 at 6:24 pm

#104 Faron on 06.17.22 at 7:53 pm

Stay in your lane bro.

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

Says the guy who is weaving all over the road and the sidewalk.
You’re sick man. Stay on your meds.

#68 Ponzius Pilatus on 06.18.22 at 6:34 pm

31 Dolcius Vitus
In the steady hand of Mario Draghi I trust.
—————-
I think your trust is misplaced.
During the recent trip of the 3 amigos (Scholz, Macron and Draghi) to Kiev, he looked a little lost.
A waste of time, not much he can do anyway.
Lots of problems back in ITALIA.
Matteo is on the prowl again.

#69 Ryan Lewenza on 06.18.22 at 6:40 pm

pBrasseur “Just because M2 growth is getting back to pre-Covid levels does not mean inflation is peaking or will peak soon.”

That was just one factor that I cited that suggests inflation could peak this year. I’m not saying the peak is imminent just that I’m seeing some early positive developments. – Ryan L

#70 Ponzius Pilatus on 06.18.22 at 6:48 pm

#49 Sail Away on 06.18.22 at 3:28 pm
#36 Søren Angst on 06.18.22 at 1:44 pm

Sail Away, so, how is that wicked 17 deg C sweltering heat working out for you on your forest primeval sojourns? And rain (imagine that in BC)?

———-

17 is possibly the best temperature for high intensity activity and dog exercise. 14C for our run up MT Benson today and probably 7C in the cloud at the top.

Climate change has turned this summer into the coldest and rainiest I can remember. Green, green, green everywhere.
——————
I’m no fan (pun intended) of hot weather.
Just great weather here for long walks, even in the rain.
Yep,
Green everywhere. And the veggie garden is lush and ready for the picking.
Dolce, how’s the drinking water situation in Northern ITALIA, where you allegedly domicile?
I hear the weather is so hot, that the wells are drying out and there’s a shortage of drinking water.
Gotta cut down on the Espressos.

#71 VAN on 06.18.22 at 6:52 pm

I heard in US, people can report capital loss if they sell stocks and buy them back in a month. Is it the same in Canada?

#72 inflation is rampant on 06.18.22 at 7:24 pm

everyone should take a few min and read this from George Noble.

“People ask what should I buy? The answer is you should be in cash,” in order to prepare for “much, much, much lower levels ahead.”

https://www.forbes.com/sites/christopherhelman/2022/06/14/star-stockpicker-finds-new-crusade-raging-against-the-everything-bubble/?sh=62c71b174ad2

#73 Dr V on 06.18.22 at 7:33 pm

For sailo

https://www.youtube.com/watch?v=Y8801vvYHnM&ab_channel=Blimp

#74 the Jaguar on 06.18.22 at 7:54 pm

Interesting Snippet from today’s NP:

Westjet Expected to Focus on the West (NP)

Industry watchers expect Westjet to remove routes from the Toronto-Montreal-Ottawa triangle as part of the airline’s new strategy to focus future growth on Western Canada.

But far from being a downsizing, experts say Westjet’s latest move is actually a “growth story” that will see the Calgary-based airline bulk up its fleet and add service to more communities across the West.

Chief executive Alexis von Hoensbroech, a former Austrian Airlines CEO who assumed the helm at Westjet in February, said the airline is at a turning point as it grapples with pent-up travel demand in the wake of the COVID-19 pandemic, inflation, spiking oil prices and staffing shortages at airports.

“They’ve taken a very pragmatic approach, (Robert Kokonis – Toronto-based aviation consultancy Airtrav Inc.), and they’ve said ‘look, let’s go back to our roots, let’s go back to what our strengths are,’ ” he said. “I think they’re going to attempt to build a fortress in the West.”

And of course there is this from March 2 2022:
WestJet and Sunwing announced today that they have reached a definitive agreement under which the WestJet Group of companies will acquire Sunwing Vacations and Sunwing Airlines. The transaction will bring together two distinctly Canadian travel and tourism success stories to deliver new travel options and greater value for travellers in the rapidly expanding leisure and work-from-anywhere travel markets.
(If one were inclined to offer additional theories they might relate to the fact that Toronto Pearson has always been a hell hole of an airport, WestJet was shorted on the better gates, and of course the proverbial ‘Let’s vote with our feet’. WestJet is also owned by Onex. That’s where Nigel Wright works. One of my big loves.

+++
For those who find the ‘return to office debate’ interesting, this offering from Friday’s CBC ‘The Current’. ( note the vocal fry of the whiners)

https://www.cbc.ca/listen/live-radio/1-63-the-current/clip/15919750-workplace-standoffs-reluctant-employees-ordered-back-office

#75 Greg on 06.18.22 at 7:56 pm

People don’t get much back from reporting capital losses. Much better to have those gains and pay the tax on it.

#76 Cow Man on 06.18.22 at 8:00 pm

“Second, I believe this shift has already started, which can then be seen in things like lumber prices with prices down over 50% ytd”

Yes the COMEX contract per 1000 board feet of lumber has dropped but the prices to the consumer at the retail level has not. Large inventories at the covid price levels need to be cleared.

Until the chip shortage is addressed new and used car prices will remain highly elevated. Farm machinery is just plain not available.

We have a very long way to go. Bad crops this year will increase food prices for wheat, corn and oil seeds significantly higher. There is no end in sight for elevated food prices.

70% of US corn goes to ethanol. With corn nearly $8 US a bushel and 15% of gasoline being from ethanol, gasoline will also remain elevated.

There is the technical world and then the real world.

#77 I'm Nobody Special on 06.18.22 at 8:27 pm

If you’ve been around for 25 years in the investment game then that puts you starting your career around 1997.

I was already out of high school and working during the last bout of inflation in the late 70s and I lived through the 20% interest rates of the early 80’s and it was a big deal then like it is now. So I’m not surprised that all eyes are on the inflation reports and interest rates.

#78 Barb on 06.18.22 at 8:41 pm

#61

from internet: “What is Bill C-11 Canada?
The bill, known as C-11 in Parliament, updates the Broadcasting Act to include streaming platforms such as Netflix and require them to follow Canadian content rules.”
—————————-
Canadian content…jeezzuzz!
We switched from Bellsat to Amazon prime and Netflix to get rid of boring yadda yadda content.

Ask yourself: how good is “content” if it requires law to air it (i.e. otherwise unmarketable, and unremarkable).

#79 I don't know on 06.18.22 at 8:45 pm

Well put.

Declining stock markets contribute to a reversal of the wealth effect, which will also help bring down inflation.

Another factor that will most likely lead to the pivot is the US mid terms. Polls are indicating the Republicans will win big, which will render Biden a lame duck. The markets will like this.

OPEC, led by the Saudis, will also increase output in exchange for the trashing of the Iran deal, or heavy modification of it, bringing down prices.

Ultimately interest rates aren’t going anywhere near as high as some are predicting. The general consensus is a positive end to the year in the markets. Have cash (junk) on hand? Now is the time to put it to use.

IDK

#80 Bdwy on 06.18.22 at 8:51 pm

….I thought I had ordered a HD Dunlop (heavy duty) and it turns out my old Honda now has a Harley Davidson tire on the front. I’m just hoping it doesn’t start leaking oil now.

….
LOL!

//////

Happy to be violating the rule of 90 these days. 55 yo. w about 75% in dirt.

I see personal RE slide as maybe a few percent but effectively zero as the first one to sell will be 15 – 20 years from now.

But please god make berkshire go back up!

#81 Bdwy on 06.18.22 at 8:56 pm

#68 Penny Henny on 06.18.22 at 6:24 pm

#104 Faron on 06.17.22 at 7:53 pm

Stay in your lane bro.

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

Says the guy who is weaving all over the road and the sidewalk.
You’re sick man. Stay on your meds

…….
His lane has gone so far off track that south dakota becomes unliveable soon. Beyond delusional. Cultish even.

Bitcoin he’s right on.

#82 Observer on 06.18.22 at 9:06 pm

#68 Penny Henny on 06.18.22 at 6:24 pm
#104 Faron on 06.17.22 at 7:53 pm

Stay in your lane bro.

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

Says the guy who is weaving all over the road and the sidewalk.
You’re sick man. Stay on your meds.

^^^^^^^^^^^^^^
You are older right? Do you think your comment makes you look wise?

And after reading the dialogue you offered your opinion on, were you able to discern who was the educated expert and who not?

#83 Michael in-north-york on 06.18.22 at 9:12 pm

#44 The Regulator on 06.18.22 at 2:52 pm

# 15 – Faron : Oh, did I say I actually read your comments?
===

You read them, because you know what is there. Logic is not your thing, give up already.

#84 millmech on 06.18.22 at 9:21 pm

Canadian housing making it to WSB.
https://www.reddit.com/r/wallstreetbets/comments/ves6s7/there_she_blows_canadas_housing_market_collapsing/

#85 Satori on 06.18.22 at 9:24 pm

#18 Sail Away on 06.18.22 at 12:07 pm
Luckily, in Nanaimo, we can:

-run up the local mountains in lieu of gym memberships
-drive almost-free-to-operate Teslas… or bike
-forage wild foods
-carry no business debt since it’s an economical place to operate while charging the same as Van/Vic consultants
-have our pick of talent because lots of people want to live in this gem and since, like Fartz but unlike our competitors, we share profits
——————————
Did Nanamio close the pulp mills? It actually sounds nice.

#86 conan on 06.18.22 at 9:26 pm

The correction might be in slow motion this time around. We spent several years with emergency low interest rates because of the global financial crisis of 2007.

No reason why we could not spends years getting back to normal. The question is what is that new normal? I doubt it is ultra low interest rates that distort the markets.

#87 Satori on 06.18.22 at 9:46 pm

#68 Penny Henny –
Hilarious!! LMAO :D

#34 The Regulator on 06.18.22 at 1:42 pm

As a long time reader of this blog, and fairly new commentator, I’ve compiled a totally unscientific study. Going back to June 13/22 – The Reset –
Number of comments per person :
# 1 – Faron : 54 (good job, sport)
# 2 – Crowdedelevatorfartz : 51 (better luck next time)
# 3 – Ponzie : 33 (shorter and more frequent, please)
# 4 – Sail Away : 27 (pick up the pace, slacker)
# 5 – Regulator : 25 (including many deletes)
Since I will no doubt be permanently deleted soon, you guys will have to pick up the slack. To the chagrin of everyone else. lol
—————————–

What a Good Chuckle!!
Thank YOU for that!! :D

#88 Satori on 06.18.22 at 9:47 pm

Thanks Ryan, but from all the different opinion pieces I have read… I am not too sure that the peak of inflation is that near.
Here’s to hoping I will eat my words.

#89 Ohm on 06.18.22 at 9:50 pm

The way I see it is left wing nuts either the media or those who truly do not understand (well, maybe now) of the costs involved trying to convince us all; especially since they decimated most individuals with Covid lock downs which as the SCIENCE states was not necessary.

They failed the elderly, especially in nursing homes and will do what ever possible to spin it with other so called emergencies. We have it all in Canada, can easily sustain ourselves; I am surrounded with cattle, pigs, wheat, barely, mustard seeds, fricken geese, poultry, oil, gas, solar, wind mills, etc.; and yet many are being starved to pay a lousy utility bill in which we export so much; especially hydro. What a crock!!! It absolutely makes no sense what the western leaders are doing. The other guys are catching on and or laughing at us (you know like Russia and China); this will not end well…

#90 crowdedelevatorfartz on 06.18.22 at 10:13 pm

@#55 rampant.ru
“Putin had nothing to do with the current inflation spike.
Convenient to blame Putin.

+++
I’m thinking the Covid emergency cash infusion to the tune of Trillions of tax payers dollars world wide might have had something to do with it.
Putin’s dalliance in Ukraine was just the icing on the “baked” economic cake.

I’m wondering when the politically correct, “bonfire of their vanities” Liberals in power finally realize the interest rate rise on the trillion dollar debt payments are going to hoover tax revenue up faster than these “modern monetary monkeys” can spend it.

#91 Sail Away on 06.18.22 at 11:05 pm

#74 Dr V on 06.18.22 at 7:33 pm

For sailo

https://www.youtube.com/watch?v=Y8801vvYHnM&ab_channel=Blimp

——–

I love tracking that race and have fairly seriously considered entering.

Here’s the thing, though:

While everyone else is hacking their way through the Inside Passage, I’d sail right out the Juan de Fuca Strait and 100 miles or so offshore, before tacking back directly toward Ketchikan.

Sure, I’d miss the checkpoints and would be dq’d, but would get a real kick out of watching the tracker with all these racers inching up in one long line, then one random character hundreds of miles away in the middle of the Pacific. Heh. It’s on the list. Maybe someday…

#92 Sail Away on 06.18.22 at 11:10 pm

#86 Satori on 06.18.22 at 9:24 pm
#18 Sail Away on 06.18.22 at 12:07 pm

Luckily, in Nanaimo, we can:

-run up the local mountains in lieu of gym memberships
-drive almost-free-to-operate Teslas… or bike
-forage wild foods
-carry no business debt since it’s an economical place to operate while charging the same as Van/Vic consultants
-have our pick of talent because lots of people want to live in this gem and since, like Fartz but unlike our competitors, we share profits

———

Did Nanamio close the pulp mills? It actually sounds nice.

———

Employee-owned Harmac paper is there, 10km southeast of town, providing jobs and supporting the community.

#93 Satori on 06.18.22 at 11:43 pm

Russians forgot they signed a non-aggression packed with the Germans. Time and time again, the Russians have dissed Europeans. They stick it to every country, no matter how many times they try to make peace… again and again.

Russians will continue to blast away homes and billions of properties without any concern. And it seems Europeans don’t learn that Russians can not be peaceful, EVER, they destroy agreements and packs and screw everyone who makes deals with them.

I don’t think Obama could do better, Trump was just as gullible as the rest of Europe… everyone is afraid of Putin. You cannot be afraid, because he won’t come around… a parasite is a parasite, no matter which way you poke it.

Putin is too old to care. I thing Binden was better than Trump or Obama… with bullies, you counter bullies with bullies. I hope we all give Ukrainians the ability to start launching rockets into Russia… then things might change.

#94 Ponzius Pilatus on 06.19.22 at 12:17 am

#94 Satori on 06.18.22 at 11:43 pm
Russians forgot they signed a non-aggression packed with the Germans. Time and time again, the Russians have dissed Europeans. They stick it to every country, no matter how many times they try to make peace… again and again.
——————
What a bunch of garbage.
Yes, there was a non-aggression “packed”.
But it was the Nazis that broke it. They first invaded Poland and than Russia.
The Russian fought back the invaders at a terrible cost of millions of lives.

#95 fishman on 06.19.22 at 12:20 am

Harmac’s paper making process was unique in that it produced a paper that was a necessity to make our masks for the Pandemic. As far as I know, the only one in Canada. I think it was because they incorporated cedar fibre that would meld with the chemical based fibres. Anyways, I appreciated their face diapers during a few critical situations. Thanks Nanaimo.

#96 VicPaul on 06.19.22 at 12:24 am

#31 Ponzius Pilatus on 06.18.22 at 1:08 pm
Global trade is now so interconnected that maybe sanctions and embargoes don’t work anymore.
The 70s oil crises was driven by an unified Opec, led by the Saudis.
Nowadays, the States are mostly self sufficient, and there are alternatives, and cars are much more efficient.

*********

The US was self-sufficient under Trump o/g policies – Trojan Joe stopped that…you lefties cheered, remember?

M58BC

#97 the Jaguar on 06.19.22 at 1:30 am

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

A gem. Art berman. For those, (Ryan Lewenza/Doug Rowat, whoever else loves data….), there are even have graphs. Omg, is there anything more exciting than graphs? ( hand me my glass of Wild Turkey please….).

Check out 9:48- 13:54/ 21:45- 22:09 (inconvenient truths)

Also, 24:18 to 25:00 ( maybe it isn’t as bad as we think?…”More room to run “…..)

And 13:40…….an opinion…..

And 21:07…who gets what and why…..

And the best graph @ 32:28———check it out.

Interesting stuff.

Well, that’s enough. I’m on my last good nerve. There must be some quiet place to lay my head down and catch a few winks..

#98 Midnight’s on 06.19.22 at 4:00 am

Interesting, J. Biden has the common sense to indicate to his fellow Americans that they shouldn’t be going over to Ukraine or Russia. Now back to our government; that tells fellow Canadian’s to go. The problem is the people that voted for This Ringling Brothers Circus Act.

#99 Phylis on 06.19.22 at 7:14 am

So, let’s say crypto goes to near zero. What sort of capital and wealth destruction does this represent? Not to mention smarty pants job losses as an industry is downsized.
For those holding the opposing point of view, get a big margin account and buy some more. Hurry.

#100 crowdedelevatorfartz on 06.19.22 at 9:27 am

The Canadian Federal Debt = $1,100 Billion dollars
Ontario’s Provincial Debt = $ 353 Billion dollars.
Quebec’s Provincial Debt = $ 219 Billion dollars.
Alberta’s provincial Debt = $ 94 Billion dollars.
BC Provincial Debt = $ 105 Billion dollars.

With rising interest rates……..
Our Federal, Provincial and Municipal taxes aren’t dropping any time soon.

https://www.debtclock.ca/

#101 Pbrasseur on 06.19.22 at 9:44 am

The decades old stimulus bubble is popping, everywhere.

Fake economy is slowly dying to be replaced by more reality based economy, one where actual productivity matters.

With its little cartel economy Canada, by all metrics, has one of the most fake economy in the world, driven essentially by cheap credit, government spending and mass immigration. As such, among developed nations, no country is more vulnerable than this one.

Safest place right now is USD, not much else…

#102 millmech on 06.19.22 at 10:03 am

#100 Phylis
If crypto goes to zero it will create a lot of wealth for me been shorting it for a few months now, same with tech, no need for margin accounts. For every loss there is a win on the other side of the trade, hoping crypto keeps going down so my account keeps going up.

#103 The Regulator on 06.19.22 at 10:09 am

# 84 – Michael of North Yawk : Good one! Please sir, may I have another?

#104 T on 06.19.22 at 10:32 am

#3 TurnerNation on 06.18.22 at 10:46 am
Parents, don’t let your kids become Blog Dogs.

—-
Weekend Deep Dive. How did we get here? An insidious halter indeed. The yoke’s on us alright.

2019: TikTok. First I’d heard, was on this weblog. And it did not feel right. Tick Tock…ominous, like a countdown (into 2020 it was).
Their logo is basically a sigil. Something behind it.
https://en.wikipedia.org/wiki/Sigil
Esoteric but so much is these days.

2019: The “Minister of Middle Middle Class Fairness” was announced. Sheer mockery, in our faces, of what was to come in 2020-21 with the destruction of small business, livelihoods, firing over medical treatments. Tell me they didn’t know. With their big Grit-eating grins.
https://en.wikipedia.org/wiki/Minister_of_Middle_Class_Prosperity

2019: The following companies began trading on a stock exchange via IPOs:
DoorDash, Zoom, Lyft, Uber, Pelaton.
Within a few months each would rise to unimaginable heights (and wealth).
Who’d like to try and convince me this was mere happenstance — before the war was kicked off 03/20?

2020 Q1: Banning plastic straws. All over that one photo — it sold us all. Yep that turtle. A small move but priming you for new control over every area of your life. A month or two later you’d be forced standing 6-6-6 feet apart outside in the cold in front of your grocery store. Back in the U.S.S.R.
(Now you cannot walk 6 week without tripping over medical waste outside)

January 2020: The term “anti vaxer” was heavily introduced into the media. Who dat? I’d never heard of such a thing. What timing. Tell me again.
CBC of course, look at the dates:

“Inside the anti-vaccination movement: CBC’s Marketplace …https://www.cbc.ca › marketplace-cheat-sheet-1.5431394 – Jan 19, 2020
Anti-vaxxers exposed: Hidden camera investigation …https://www.youtube.com › watch
Feb 21, 2020
I’m Not Vaccine-Resistant or an ‘Anti-Vaxxer’ – CBChttps://www.cbc.ca › view › vaccines-canada-2020
Jan 30, 2020″

————

You have way too much time on your hands.

I have attempted to have a discussion with your before but you never respond. You’re probably too busy thinking about the total garbage you’re going to write here next.

99.9% of what you share here is nonsense and I wonder what is wrong with you and if anyone can help.

Seek help.

#105 T on 06.19.22 at 10:34 am

#100 Phylis on 06.19.22 at 7:14 am
So, let’s say crypto goes to near zero. What sort of capital and wealth destruction does this represent? Not to mention smarty pants job losses as an industry is downsized.
For those holding the opposing point of view, get a big margin account and buy some more. Hurry.

————

Smart money isn’t investing in crypto. Don’t worry about the crypto bros, McDonalds is always hiring.

#106 Prince Polo on 06.19.22 at 10:48 am

#20 Faron on 06.15.22 at 2:55 pm
#3 Søren Angst on 06.15.22 at 2:16 pm

The better question is, did he have an alternate blog post ready in case the raise was only 0.5%?!?!

Look at the URL…

Using that logic, the illustrious Mr. Turner had 9 alternate posts for this one??!!
https://www.greaterfool.ca/2022/06/14/seriously-10/

C’mon man – srsly? I think it means he’s written 9 other “Seriously” posts.

Therefore, the question is, what is the original “Incoming” post?
https://www.greaterfool.ca/2009/07/28/incoming/

#107 Lorne on 06.19.22 at 10:48 am

#92 Sail Away on 06.18.22 at 11:05 pm
#74 Dr V on 06.18.22 at 7:33 pm

For sailo

https://www.youtube.com/watch?v=Y8801vvYHnM&ab_channel=Blimp

——–

I love tracking that race and have fairly seriously considered entering.

Here’s the thing, though:

While everyone else is hacking their way through the Inside Passage, I’d sail right out the Juan de Fuca Strait and 100 miles or so offshore, before tacking back directly toward Ketchikan.

Sure, I’d miss the checkpoints and would be dq’d, but would get a real kick out of watching the tracker with all these racers inching up in one long line, then one random character hundreds of miles away in the middle of the Pacific. Heh. It’s on the list. Maybe someday…
……..

Not going to work too well with a NW…..gotta pray for a nice low pressure SE

#108 Doug t on 06.19.22 at 12:00 pm

#105 T

Turnernation has some great posts – just not your cup of tea – why do you read them if you don’t care for his comments? Just curious

#109 Dr V on 06.19.22 at 12:05 pm

92 Sail away

“…Sure, I’d miss the checkpoints and would be dq’d,…”
——————————————————-

Looks like going the outside is an option. Tracker showing 3 vessels that did.

https://r2ak2022.maprogress.com/

#110 Shawn on 06.19.22 at 12:06 pm

Crypto Wealth Destruction?

#100 Phylis on 06.19.22 at 7:14 am

So, let’s say crypto goes to near zero. What sort of capital and wealth destruction does this represent? Not to mention smarty pants job losses as an industry is downsized.
For those holding the opposing point of view, get a big margin account and buy some more. Hurry.

********************************
When Crypto values rose it created aggregate wealth out of thin air. Now as crypto prices decline the associated aggregate wealth simply disappears.

I believe someone posted recently that the aggregate wealth peaked around 3 trillion and has already shriveled down to under 1 trillion. So about another trillion to go if it heads to zero.

But a huge part of the story was also money transferred among buyers and sellers of crypto. There will be a large pool of investors who made gains at the expense of others. Since trading is active there were likely trillions made and trillions lost. Or at least many billions.

As of today a lot of people have cashed out with gains while a lot of others cashed out with losses. These two cancel out (excluding trading fees) and are in addition to the remaining one trillion or so market cap.

Some traders will have lost huge amounts. There will be divorces and probably suicides.

Then as you say there were people employed by trading companies and software companies and crypto “mining” companies.

Just another day in the world economy though. Nothing for a balanced and diversified investor to worry about.

#111 crowdedelevatorfartz on 06.19.22 at 12:10 pm

@#105 T

With their big Grit-eating grins.
https://en.wikipedia.org/wiki/Minister_of_Middle_Class_Prosperity

+++++

You forgot one letter in the Liberals “Grit”.
It’s now spelled Grift.

#112 Sail Away on 06.19.22 at 12:20 pm

#108 Lorne on 06.19.22 at 10:48 am
#92 Sail Away on 06.18.22 at 11:05 pm
#74 Dr V on 06.18.22 at 7:33 pm

For sailo

https://www.youtube.com/watch?v=Y8801vvYHnM&ab_channel=Blimp

———

I love tracking that race and have fairly seriously considered entering.

Here’s the thing, though:

While everyone else is hacking their way through the Inside Passage, I’d sail right out the Juan de Fuca Strait and 100 miles or so offshore, before tacking back directly toward Ketchikan.

Sure, I’d miss the checkpoints and would be dq’d, but would get a real kick out of watching the tracker with all these racers inching up in one long line, then one random character hundreds of miles away in the middle of the Pacific. Heh. It’s on the list. Maybe someday…

———

Not going to work too well with a NW…..gotta pray for a nice low pressure SE

———

Yes, a SE low would be best, but not too common in summer. Usually, the offshore is ok in summer for going north, with wind more westerly. The inside passage is the full-on headwind due to adiabatic funneling effects.

If you look at the tracker, the leader this year actually took the outside open-water route and is waaay ahead of the insiders. First to the Bella Coola checkpoint by far. If I were in, I’d be far offshore skirting Haida Gwaii and skipping the checkpoint altogether.

#113 Michael in-north-york on 06.19.22 at 12:26 pm

#104 The Regulator on 06.19.22 at 10:09 am

# 84 – Michael of North Yawk : Good one! Please sir, may I have another?
===

Sure. You can even write one yourself, and then respond.

#114 Sail Away on 06.19.22 at 12:29 pm

#110 Dr V on 06.19.22 at 12:05 pm
92 Sail away

“…Sure, I’d miss the checkpoints and would be dq’d,…”

———

Looks like going the outside is an option. Tracker showing 3 vessels that did.

https://r2ak2022.maprogress.com/

———

Yep. It would just be painful to return to shore. Sort of like Moitessier, who could easily have won the 1968 Golden Globe circumnav race, but decided to keep sailing for a few more months instead of coming back for the prize. Totally understandable. Tawdry prizes can’t compare to wild and free open-ocean singlehanding.

https://en.m.wikipedia.org/wiki/Bernard_Moitessier#:~:text=Although%20he%20abandoned%20the%20race,by%20a%20yacht%2C%20with%20a

#115 KNOW IT ALL on 06.19.22 at 12:37 pm

I think it’s about time mental and physical apptitude tests are given yearly to those with the highest authority.

When one start going its not much longer before the other follows.

What a circus show that White House is…..LOL!!

The greatest show on earth.

https://youtu.be/pct1uEhAqBQ

#116 T on 06.19.22 at 12:42 pm

#109 Doug t on 06.19.22 at 12:00 pm
#105 T

Turnernation has some great posts – just not your cup of tea – why do you read them if you don’t care for his comments? Just curious

————

I have an app read the entire page for me while I’m doing chores around the house. TN’s comments are conspiracy and nonsense. It shouldn’t be anyones cup of tea, we should be rooted in and discussing reality.

#117 The Regulator on 06.19.22 at 2:52 pm

# 114 – michael in north york : you need to work on your comebacks, dawg. Arf arf.

#118 PintheTailonDonquixote on 06.19.22 at 5:35 pm

DELETED (Anti-vaccine)

#119 Lorne on 06.19.22 at 6:33 pm

#113 Sail Away on 06.19.22 at 12:20 pm
#108 Lorne on 06.19.22 at 10:48 am
#92 Sail Away on 06.18.22 at 11:05 pm
#74 Dr V on 06.18.22 at 7:33 pm

For sailo

https://www.youtube.com/watch?v=Y8801vvYHnM&ab_channel=Blimp

———

I love tracking that race and have fairly seriously considered entering.

Here’s the thing, though:

While everyone else is hacking their way through the Inside Passage, I’d sail right out the Juan de Fuca Strait and 100 miles or so offshore, before tacking back directly toward Ketchikan.

Sure, I’d miss the checkpoints and would be dq’d, but would get a real kick out of watching the tracker with all these racers inching up in one long line, then one random character hundreds of miles away in the middle of the Pacific. Heh. It’s on the list. Maybe someday…

———

Not going to work too well with a NW…..gotta pray for a nice low pressure SE

———

Yes, a SE low would be best, but not too common in summer. Usually, the offshore is ok in summer for going north, with wind more westerly. The inside passage is the full-on headwind due to adiabatic funneling effects.

If you look at the tracker, the leader this year actually took the outside open-water route and is waaay ahead of the insiders. First to the Bella Coola checkpoint by far. If I were in, I’d be far offshore skirting Haida Gwaii and skipping the checkpoint altogether.
……
I think you mean Bella Bella.
Looks like the leader did get some SE going up the WCVI. Why skip the checkpoint when you have travelled up the outside, including Queen Charlotte Sound and are now in wide open Hecate Strait after checking in; You might even win!

#120 DonQuixote on 06.19.22 at 7:27 pm

I am not anti-vaccine, I am against labelling people as anti-Vaxer.

Why delete my comment?

Because you called the vaccines ‘experimental’ when they are not, and billions of doses have been administered. Only anti-vaxers do that. – Garth

#121 DonQuixote on 06.19.22 at 7:49 pm

DELETED (Anti-vaccine)

#122 salonist on 06.20.22 at 2:26 pm

Pierre Poilievre? reincarnation of the demon.remove compassion for those that receive livable benefits
People that i grew up with about to close their factory
made a deal using accounting practises to sell the company and machinery to china
secured new jobs within the new company
200 people lost employment and their pensions
Pierre boy says tough
life’s like that but if you want food on the table
i’ll create front line jobs at fast food restaurants

Trudeau,trains chines forces and pilots in canada at present
his handlers are whack jobs
loves a good dictatorship
Singh, he’s decimated his party
the liberals had a belly laugh

the fix is in but which one will get 20% of the population to vote for them, just like harper