Ahead?

Regular addicts will know I work with smart people. This blog is now shared with Ryan, Doug, Sinan and – to water down the sloshing cauldron of toxic masculinity – Tatiana.

Mostly we agree. On the weekend Ryan shellacked the Bank of Canada for failing to foresee a surge in the cost of living, and looked at the implications of the outsized 1% hike in the key lending rate last week. Not good for assets, from stocks to houses. He also mused on the potential of the CB ramping back its aggressive tightening in ’23.

Dumping on Tiff is the meme now. It’s everywhere. Pepe is the cheerleader, of course. Lost on many is the fact every central bank on the planet is dealing with the same bad hand. Putin’s crazy war in Ukraine. Hundred dollar oil. Supply chain wonkiness after two years of pandemic. China’s Covid obsession leading to lockdowns that trashed economic growth. And Harry Styles, of course.

Inflation thrives not just here. Consumers in the US, Britain, Europe, Russia, Australia and all developing nations are being whacked. Making it worse is the US$ romp higher. So, countries with a lot of debt denominated in American dollars (like Canada) now have a harder time paying it back. But as rates rise and current conditions prevail, the greenback remains the safest go-to place for wealth. (You should have some.)

The conclusion: Tiff, our CB boss, cannot be held responsible for inflation (Poilievre is lying to you) and the interest rate ballooning is necessary. Where the Bank of Canada screwed up, however (as Ryan said), was in telling people two years ago the cost of money would stay low for, “a long time.”

“If you’ve got a mortgage, if you’re considering making a major purchase, or you’re a business and considering making an investment, you can be confident rates will be low for a long time.” – Tiff Macklem during the pandemic.

That was a right stupid thing to say. Central bakers are generally far more circumspect. It was… almost… as if the guy was encouraging people to go out and buy something with borrowed money, since that would help with the Covid recovery. For that irresponsibility, he deserves two weeks of fire ants in his shorts.

However, it was no excuse for newbie buyers jumping into a bidding war and reaching for an asset which cost 40% than it did twelve months earlier. FOMOers who did so forgot the two divine guidances of this blog. First, only buy residential real estate if you need a home and can afford it without gutting your family’s finances. No, that does not mean 95% financing or fighting in a bidding war. Second, remember the Rule of 90. The percentage of your net worth in a house should not exceed ninety less your age. Lately most new buyers have been putting 100% of their NW in this one asset, with staggering debt.

So what about the financial markets?

We know what the near term will bring – the Fed will boost again by at least 75 bips, and maybe 1%, next week. That won’t be the end. Most economists think inflation has yet to peak. Europe is facing a mother of an energy crisis. Putin won’t quit. Plus, Covid is coming back and this time politicians are terrified of imposing new restrictions or a mask mandate – so the health care system is bracing. In addition, US politics is entering a dark zone now that the Supremes are rabid and the midterms loom. Lots to fret over. Oh, and did I mention recession? Could get one of those, too.

Wall Street strategists have been trying to figure out what the best play is. The range of estimates is stunning – from negative 12% to positive 30% for the key US market. If you believe the bears, selling and sheltering in cash might make sense. But if you take the opposite view, this is a time to gobble cheap assets or, at least, stay invested and wait for those inevitable days of outsized gains.

Markets are volatile and vacillating. In half of the last two months the S&P 500 has swung more than 5% weekly. Look at last week – four days of declines, then a monumental surge Friday. Surveys show consumers are in a funk. But they keep on spending. Travelling. Borrowing. Businesses don’t know whether to stock up when they can or shed inventory because a storm’s coming. Central bankers are still telling us they can whip inflation and have a soft landing (no recession). But does anyone believe them now?

Ryan thinks CBs may back off their rate hikes next year. Maybe so. I’m not convinced, however, since inflation’s unlikely to go from 8% to 2% in less than 12 months. If the bankers make another mistake – dropping rates and allowing mortgages and loans to get cheaper again, too soon, spurring demand – the next round of tightening may have to take rates back to 10%, instead of 3%. Ask your daddy what that did to house prices in 1990.

Today’s advice: if you’re sitting on cash, how could this be a bad time to buy some quality assets? Markets have shed a quarter of their value and over the course of history have bounced back 100% of the time. Looks like a no-brainer. If you’re already invested, stay that way. Yeah, B&D portfolios are down about 10% (only half of the equity decline), but that’s temporary. Just stop looking at your accounts until, oh, Christmas.

Crypto? Fuhgeddaboudit. GICs? If you have millions, no prob. Otherwise you’re locking into inflationary losses. The greatest risk remains running out of money, not losing it. Houses? See the rules seven paras above.

The best advice remains what we told you a week ago. Enjoy the summer. Do not turn on BNN. And, for the love of Dog, stop coming here.

About the picture: “Hope you are doing well. My wife and I are long time readers of your pathetic blog. It has and continues to be a refreshing and insightful daily read for us,” writes Bojan in London ON. “Here is a picture of our 7 year old Norfolk Terrier, Archie, taking us for a spin around the block. It might be too late to train the lead foot out of him!”

114 comments ↓

#1 Garth vs. 45 on 07.17.22 at 2:01 pm

Bank of Canada raised a full percentage point (66% increase).
This could be a sign we’re headed for double digit interest rates.
Will Garth be right that interest rates remain single digit?

You confuse the CB rate with consumer rates. Common mistake. – Garth

#2 Dogman01 on 07.17.22 at 2:22 pm

Mortgages, Interest Rates BOC etc good stuff:

High level: Steve Saretsky
https://www.youtube.com/watch?v=v1NobrpYujM

On the ground: Downsizing Dangers Selling Your House – Unexpected Losses
https://www.youtube.com/watch?v=3bWGCnGj6_o

#3 Dogman01 on 07.17.22 at 2:26 pm

More to fret over:

Rejectionism starting to take hold among the global working\middle classes:

A Popular Uprising Against the Elites Has Gone Global | Opinion
https://www.newsweek.com/popular-uprising-against-elites-has-gone-global-opinion-1722653

Media Silence on Global Protest
https://www.youtube.com/watch?v=lG660H1JjWU

Sri Lanka crisis:
– An ESG Green focused IMF\World Bank elite globalist institutions offered Sri Lanka’s leadership cohort loans etc, if they would eliminate use of Fertilizer to “save the planet”, with the vision that the new organic product would sell better on the world market.
– Their agriculture industry then experienced massive declines in food productivity creating this crisis in an already precarious society.

To me this sounds so much like other top down ideological agriculture disasters https://en.wikipedia.org/wiki/Great_Chinese_Famine and don’t for one second doubt that Western leaders can be caught up in the ideological fanaticism of being “green”.

The scary thing is Canada’s intelligentsia is now on a kick to implement top-down Green mandates to our farmers, starting to see the “paid off”, always protected Canadian Dairy Farmer lobby involved in commercials supporting “Net Zero”.

#4 Blessed_Canadian_Millennial on 07.17.22 at 2:39 pm

Sage advice, as well always Garth!

#5 Prince Polo on 07.17.22 at 2:39 pm

Time to hang a “Gone fishin’” sign on the greaterfool home page…

#6 Leftover on 07.17.22 at 2:46 pm

Ahead is almost certainly a recession – zero-Covid lock downs in China causing near zero growth, Russian aggression likely to cause a Euro-zone slow down this winter.

CB’s are doing what they can to stifle demand, and are driven by their own self-fulfilling prophecy – the need for higher interest rates so that they can lower them in 2023 (24?) to deal with the recession.

Good time to sit tight.

#7 Søren Angst on 07.17.22 at 2:51 pm

2020-2022

1. Worst Public Health Disaster in a Century.
2. Second worst Economic Crash, 2nd only to the Great Depression.
3. Meanwhile, experiencing Severe Inflation with Recession expected end of year or early next year.
4. The War.

A populace subjected to all of the above factors in but 2.5 years will not suffer gladly.

History repeats. A good teacher and what it teaches about the above in this:

Expect turmoil in Society.

—————–

The World’s CBs dropped the ball by not increasing rates earlier when all the signs were there to do so.

Your argument (again) is that if they dropped the ball, then it’s OK that the Cdn CB did as well.

As much as I love you Garth, that is a Non Sequitur, at the very least in the

Two wrongs don’t make a right

= no justification for acting in a similar way Category.

#8 Scott in Gibsons on 07.17.22 at 2:51 pm

Saying that central bankers have been dealt a “bad hand” is hilarious. They have exploded their balance sheets at the behest of their political masters. THIS is the cause of the inflation we see now. The Russia effect is self inflicted by global politicians captured by the likes of the WEF and other bribery/blackmail schemes. It is the West that committed economic suicide by mistakenly believing that they could crush Russia’s economy but instead crushed their own. Compromised and corrupt is no way to go through life. Add in China’s collapsing real estate Ponzi and we’re in an unusually dire situation. This is not another BTFD scenario. Excessive leverage is unwinding which will drive down asset prices until the bad debt is gone. After that is done and markets are clearly rising we can think about re-entering. If you don’t understand the truth of what’s really happening in the world how can you make good decisions or god forbid advise others?

#9 Søren Angst on 07.17.22 at 3:06 pm

Markets have shed a quarter of their value and over the course of history have bounced back 100% of the time…Just stop looking at your accounts until, oh, Christmas *.

– Garth

————–

Uhhh….NO.

Unlike you, Mr. Money Bags, Threadbare Me will be glued to Google Finance et. al. so I can

SAVOUR the BOUNCE BACK

every second and minute of it as it happens.

And of course I will come to read this Blog as you will predictably delight in telling us:

I told you so.

And THAT’S a good thing.

* Halloween month

#10 Yukon Elvis on 07.17.22 at 3:14 pm

Germany’s parliament on Friday agreed to reactivate retired coal power plants to generate electricity, decreasing their reliance on precarious Russian supplies, but potentially bringing the country further from its climate goals.

https://www.forbes.com/sites/juliecoleman/2022/07/08/germany-reopens-coal-plants-because-of-reduced-russian-energy/?sh=675689227350

#11 Michael King on 07.17.22 at 3:20 pm

Have been reading this blog for years and many thanks to you and your colleagues for invaluable advice. The mandatory suck up is 100% sincere. With respect, since the beginning of the pandemic I have been puzzled by the optimism this site has espoused regarding the ending of Covid.
You state: “Plus, Covid is coming back and this time politicians are terrified of imposing new restrictions or a mask mandate – so the health care system is bracing.” It never went away! I implore fellow readers to at the very least mask up with N95s or better and stay up to date with vaccinations. Here’s a reality check.
https://www.theatlantic.com/health/archive/2022/07/ba5-covid-subvariants-forever/670514/

#12 Doug t on 07.17.22 at 3:24 pm

I’m following Garths advice – visiting my brother for 10 days in Welland – boat on the dock in his backyard and fishing everyday………chill while the storm thunders

#13 Paul on 07.17.22 at 3:26 pm

If you’ve got a mortgage, if you’re considering making a major purchase, or you’re a business and considering making an investment, you can be confident rates will be low for a long time.” – Tiff Macklem during the pandemic.
————————————————————————————————
Maybe Tiiff was or is the liar?

#14 I’m stupid on 07.17.22 at 3:27 pm

I do hvac many here know that. I can tell you what I’m seeing on my sites. Nobody wants to work hard right now, myself included. It seems like everyone is taking the summer off. New homes normally took 3-4 weeks for framing now it’s taking 1.5-2 months. What use to be 3-4 trades working on a home is now 1 trade every 2 days. You can’t blame anyone because for the last 2 years we’ve been just working and going home. Now it’s like a bunch of caged animals running wild.

#15 baloney Sandwitch on 07.17.22 at 3:32 pm

Unemployment and Inflation are inversely correlated. To break the back of inflation some people will need to be fired. Plus we are coming off an asset price bubble. Its going to be rough in 2022-23 but the sun will rise again in 2024 (when Trump may come back, dog forbid).

#16 Billy on 07.17.22 at 3:42 pm

Inflation is a worldwide issue, but it appears that the BOC may well have gotten itself ahead of the FED. One more way that Canada’s credibility is being eroded.
https://www.marketwatch.com/articles/fed-leaning-toward-0-75-percentage-point-rate-hike-51658078368?mod=mw_latestnews

#17 Diamond Dog on 07.17.22 at 3:46 pm

I can’t be too hard on Macklem myself. Poilievre, the born liar that he is, asserts that our Canadian BoC governor is a politicized pick from Trudeau but the greater truth is that Tiff largely has to follow the lead of the Federal Reserve for a wide host of factors, namely currencies and borrowing loonies in U.S. dollars not to mention political pressure and trade.

My point is that the U.S. Federal reserve is politicized, I’m convinced of it and by proxy so is our CB in Canada but not the way Poilievre describes.

While being topical on Poilievre, this is a man with some deep character flaws. He’s dishonest. Adversarial to a fault (a big part of a federal government is collaboration between the provinces and treating them all the same. This is a terrible fault to have as a PM). Poilievre is high on himself, arrogant, a populist poser who is out of his depth. His takes on the economy are cringe worthy because he describes the causes of economic problems well enough but fails utterly with the solutions (like pumping Crypto). Pierre is creative only when it comes down to running down others. If he’s chosen to lead the Conservatives, expect failure. It will either come because Canadians reject him at the polls or come because he blows it as a leader, too many character flaws mainly, he lies.

As for inflation timelines, no one really had a bead on inflation back in the 70’s and 80’s that really stood out in that era besides Friedman. His take on it even though it stretches back 40 years, is sound:

https://www.youtube.com/watch?v=B_nGEj8wIP0

If readers haven’t watched the video, do so. Readers will have few question marks concerning monetary policy and inflation if they do. What’s most notable is when Friedman discusses the timelines between rapid increases in the money supply (think 2020) and inflation. Friedman discusses a 2 year lag between broad money and peak inflation and discusses a 12 to 18 month lag between m2 and inflation in the 12 to 18 month range.

In 2020, m2 peaked at 27% in the U.S., highest in history, higher than WWII and nearly double m2 in the 70’s:

https://www.longtermtrends.net/m2-money-supply-vs-inflation/

The reason why I oft repeat the chart above, is because we have never seen this kind of cash infusion showing up in savings from the windfalls of an everything bubble pumped so much so from the Fed like this before. Couple this with Friedman’s timelines and the U.S. Fed still hitting the gas in December of last year with 7% inflation and we see a picture of peak inflation lasting at a minimum of this summer. The Fed still had rates at zero and was buying MBS’s in March of this year stretching high inflation into the fall of next year… with broad money.

With m2 specifically, the U.S. according to the Federal reserve… didn’t fall below 7% (the 20 year average before the pandemic) until May of this year. Add 12 to 18 months and we are still coming into next summer or fall before prices begin to decline “if and only if the Federal reserve induces a recession”. We need a recession to shorten the timeline. If we don’t get that recession, inflation will likely cause a recession on its own but with longer timelines.

If the Fed doesn’t induce a recession by sucking money out of the supply through tighter credit, an inflation caused recession is the worst case scenario. This would mean true stagflation as it’s defined, high unemployment, high bankruptcy rates, financial sectors in ruin and needing bailouts, governments running out of money and likely a recession if not a depression that lasts 4 to 6 quarters or more until the Fed wises up but they already know this. The key question is, do enough politicians in Washington know it.

To summarize, Ryan’s fears yesterday concerning CB’s in Canada and the U.S. overshooting raising rates too high are justified. We should also be afraid of the Fed chickening out lowering rates before price behavior is broken, at the behest of it’s overlords in Washington. If the Fed lowers rates before price behavior is broken and home owners are floating variable for that chance to lock in at lower rates, take it. The consequences of continuing to ride variable rates beyond Federal stimulus before next summer is one of rolling the dice with variables past 7% in a worse case scenario.

I know I’m a windbag, comments are too long but I know this stuff. It can’t be explained in 1,000 words or less, it’s too complex. We aren’t just talking about systemic shocks, we are talking about peoples life savings in ETF’s, stocks and bonds. The bond markets and real estate specifically are most relevant to this discussion. When one realizes the causes of inflation/deflation and the timelines involved in reversing inflation/deflation, then one realizes “investor and manager alike”, what to do with money on the table.

Take note readers, we’re at the heart of it.

#18 Quintilian on 07.17.22 at 3:50 pm

#15 baloney Sandwitch on 07.17.22 at 3:32 pm
“Unemployment and Inflation are inversely correlated. To break the back of inflation some people will need to be fired”

True, and interestingly enough, if inflation is left unchecked, unemployment and inflation become directly proportionally.

Tick Tock, Tick Tock

#19 Tom from Mississauga on 07.17.22 at 4:01 pm

Security parameters that underpin globalization will continue breaking down in new regions. Commercial maritime vessels haven’t been designed to run blockades or fight piracy since 1945. Intricate, elongated finished and intermediary manufacturing and agricultural supply chains will find new problems beyond gas turbine repair in the world of 2023.

#20 ogdoad on 07.17.22 at 4:03 pm

Hey, ummm…I’ve always liked the name Tatiana…annnd just wondering if, ummm….maybe she’d like to hang out sometime?

I’ve heard long-distance relationships never work…buuut whoever said that was prob. right…like 9 million years ago…

ummm, ya, soooo…[email protected]!…

Og

#21 Paddy on 07.17.22 at 4:03 pm

Where the Bank of Canada screwed up, however (as Ryan said), was in telling people two years ago the cost of money would stay low for, “a long time.”

2 years is a long time for some people…not in my world though and definitely not in my investment horizon/timeline….but obv a lot of people took the bait.
They wouldn’t have stopped at houses either, so consider it a favour that Tiff is doing what he’s doing.

#22 NOSTRADAMUS on 07.17.22 at 4:04 pm

THE INESCAPABLE REALITY FOR CANADIAN REAL ESTATE MOVING FORWARD!
Six long months ago I referenced that Evergrande a major Chinese property developer was in serious financial peril. This I felt was a glimpse into the real estate future for Canada. I was spanked and accused of being a Chicken little, there was nothing to fear, move along. Well, homebuyers in China are now boycotting payments, deepening the country’s real estate crisis and fueling fears of contagion. Mounting signs of stress this week in an industry that accounts for about a quarter of the world’s second largest economy have roiled China’s credit markets, dragged down the nation’s bank stocks and pummeled commodities from iron or to copper. Property has been getting steadily worse the whole time, prices, sales, starts, all terrible. The chronic deterioration has now taken another step. It was always going to hit the financial sector eventually, given the prevalence of collateral in loan books with large real estate positions .What started with China’s Evergrande Group is now snowballing into a crisis that risks engulfing the majority of the country’s developers, it’s biggest lenders and a middle class that has significant wealth tied to the property market. China’s home prices have tumbled 10 months straight, according to data released on Friday. The whole pyramid is collapsing now. Homebuyers have stopped mortgage payments on at least 100 projects in more than 50 cities as of Wednesday. Housing in China, like Canada has been a sure bet over the past two decades to a growing risk. The Chinese government, like the Canadian government (finally) has cracked down on leverage in the real estate industry, helping drive up debt refinancing costs for developers and triggering a record wave of defaults.
The Real estate industry has an oversized impact on the economy. When related sectors like construction and property services are included, real estate accounts for more than a quarter of economic output. Like Canada about 70% of household wealth is stored in property, along with 30-40% of bank loans books. If China is the canary in the coal mine as I predicted six long months ago , I believe the pain is about to get a lot worse. Just a bit of a lag time, before reality catches up. Steady Lads, hold the line.

#23 Flop… on 07.17.22 at 4:07 pm

Don’t know how to verify it because my internet day pass only allows me to look at stuff mostly this side of The Rockies.

Apparently someone in Brampton just sold a house for 1.65m, after purchasing it for 2.16 back in January.

Massive Pink Snow dump in the summer time.

I found the out address from the listing numbers, but I’ll leave it down.

I started doing the math, and this is what I concluded.

Someone in Brampton has bigger problems than Patrick Brown…

M48BC

#24 Vic Hood on 07.17.22 at 4:10 pm

Ah, my poor lost lambs, listen to great grandad. There is only one way that houses become affordable, and that is when they cost less. That will come after the mortgage interest rates, artifically depressed for political purposes, come to reflect reality. Like it or not the risk rate reflects the interest rate . not taking into account the real leverage supporting speculation, FOMO and all the rest we have lost sight of the difference between cost and value. taking these factors out will reveal how exceedingly tenuous our situation really is. like it or not sometimes when we gamble we loose.

We may not like to recognize it but one of the strengths of capitolism is it’s ability to give itself an enema.

Governments, the BofC, and even mister market control the economy, until they don’t.

#25 UCC on 07.17.22 at 4:22 pm

Diamond Dog on 07.17.22 at 3:46 pm

While being topical on Poilievre, this is a man with some deep character flaws. He’s dishonest. Adversarial to a fault (a big part of a federal government is collaboration between the provinces and treating them all the same. This is a terrible fault to have as a PM). Poilievre is high on himself, arrogant, a populist poser who is out of his depth.

__________

Oh my, diamond dog, JT & his new haircut has Poilievre beat 25 to one in the lie, flaw & the adversarial departments. Just look at how JT has split this country politically & financially as an ideologue using virtual signalling, lies and finger pointing. He could not have made a bigger mess….

#26 Arctic Gringo: Qalunaaq on 07.17.22 at 4:38 pm

I don’t disagree with the necessity of higher rates (I welcome action towards normalization). However, in Tiff’s defense, Poloz’s “predictions”/statements also provided ebb and flow forward guidance over his tenure.

2013 (bullish): https://www.reuters.com/article/uk-g20-canada-poloz-idUKBRE96J06120130720

2016 (bearish): https://www.bis.org/review/r160921e.htm

2018 (bearish (?)): https://www.kitco.com/news/2018-01-17/HIGHLIGHTS-Bank-of-Canada-apos-s-Poloz-and-Wilkins-speak-after-rate-hike.html

In the 2018 statement, Poloz did mention the need for protection against (overnight rate bullish) economic shock (the COVID).

I’d want their salary, but not their job.

#27 Big Bucks on 07.17.22 at 4:58 pm

Always believed the slogan ,”never bet against the US” but my money is now on Asia,thank you very much.Russia,India and China as strategic partners will lay a beatdown on America like never before.Inflation?We ain’t seen nothin yet.20-25% this winter in Europe and maybe 15% in NA.Buckle up!

#28 Barzy on 07.17.22 at 4:59 pm

FOMO spelled another way is FONHWMNH (Fear of not having what my neighbor has) Its #10 in the commandments and it a recipe for long term financial (and social) disaster if not followed

#29 Joseph R on 07.17.22 at 5:00 pm

#25 UCC on 07.17.22 at 4:22 pm
Diamond Dog on 07.17.22 at 3:46 pm

While being topical on Poilievre, this is a man with some deep character flaws. He’s dishonest. Adversarial to a fault (a big part of a federal government is collaboration between the provinces and treating them all the same. This is a terrible fault to have as a PM). Poilievre is high on himself, arrogant, a populist poser who is out of his depth.

__________

Oh my, diamond dog, JT & his new haircut has Poilievre beat 25 to one in the lie, flaw & the adversarial departments. Just look at how JT has split this country politically & financially as an ideologue using virtual signalling, lies and finger pointing. He could not have made a bigger mess….

——————————–

As soon as someone points out Pepe’s flaws, his fan club can’t help but to “fight back” by obsessing over the PM.

Don’t call it a cult though….

#30 Lefty on 07.17.22 at 5:02 pm

Low for me is anything under 6%

#31 Penny Henny on 07.17.22 at 5:04 pm

#12 Doug t on 07.17.22 at 3:24 pm
I’m following Garths advice – visiting my brother for 10 days in Welland – boat on the dock in his backyard and fishing everyday………chill while the storm thunders
//////////////

Go to Handlebar Hanks for pizza. Awesome.

Oh and shut up Dolce.

#32 Flop… on 07.17.22 at 5:08 pm

Speaking of politicians in Ontario and real estate, I see Doug Fords pad just hit the market for 3.2 million.

Didn’t see any pictures of the kitchen.

I suspect they didn’t want to show the groove worn into the floorboards on the way to the refrigerator…

M48BC

https://toronto.ctvnews.ca/doug-ford-s-house-just-hit-market-for-3-2-million-1.5989518

#33 middling on 07.17.22 at 5:10 pm

I like coming here.

I don’t like JT, Pepe seems like a terrible option as well. A beady-eyed opportunist, with no real solutions, and no understanding of the housing market.

#34 Joseph R on 07.17.22 at 5:14 pm

#3 Dogman01 on 07.17.22 at 2:26 pm
More to fret over:

Rejectionism starting to take hold among the global working\middle classes:

A Popular Uprising Against the Elites Has Gone Global | Opinion
https://www.newsweek.com/popular-uprising-against-elites-has-gone-global-opinion-1722653

Media Silence on Global Protest
https://www.youtube.com/watch?v=lG660H1JjWU

——–_———————–

Sky New is Media. It’s part of Murdoch’s empire, which includes Fox News. They have an agenda.

Protect yourself for them by reading multiple news sources. Also, the Sri Lanka protests are talked about on many other media sources, just without Murdoch’s agenda.

If there was a real “uprising” against the global “elites” Murdoch would be the first target.

#35 Reno Nation on 07.17.22 at 5:26 pm

The ultimate goal is acheiving 1980s pricing on all homes, townhomes and condos in Canada. That way everything will be affordable, the boomers and older folks got their returns and the only thing government had to do to help younger folks get into the market was raise the rates to rebalance the markets lower, not acuallly build anything. Let the fallen priced homes provide the needed lower cost housing. Voila, free at the stroke of a pen!

#36 Keith on 07.17.22 at 5:33 pm

Inflation is a monetary phenomenon if you believe Friedman, but as usual economists can’t agree on much.

https://evonomics.com/moneysupply/

#37 Cars on 07.17.22 at 5:33 pm

Smart Dog owner in the photo.

Drivers a reliable, efficient Mazda.

Not a German overpriced ride with below average reliability ratings.

#38 Hindsight on 07.17.22 at 5:35 pm

CB’s were not dealt a bad hand…eyes wide open Garth, eyes wide open!!

#39 Chameleon on 07.17.22 at 5:39 pm

Felix,

2nd article about leashing those evil bird-killing cats this week!

https://nationalpost.com/opinion/jamie-sarkonak-outdoor-cats-are-a-menace-leashing-them-is-the-least-we-can-do

No mention about buildings, wind turbines, solar panels killing birds – AKA humans. Or the control over mice and rats cats provide.

I enjoyed the decade old “study” of Canada quoted to argue support for Toronto municipality. I also enjoyed the “narrow” range quoted for the estimated annual bird kills.

“In Canada, cats are the number one cause of death by a long shot, killing an estimated 100 to 269 million birds per year, according 2013 studies in the journal Avian Conservation and Ecology.”

#40 THE DANDADA on 07.17.22 at 5:44 pm

“you can be confident rates will be low for a long time.” – Tiff Macklem

Don’t fight the fed can now be replaced with DON’T trust the fed.

We don’t know who to believe anymore.

What a sad state were in.

Believe what you see. There was no way rates were staying at less than 1%. We told you so repeatedly. – Garth

#41 Mike G on 07.17.22 at 5:50 pm

DELETED

#42 Doug t on 07.17.22 at 6:07 pm

#31 penny

Thanks for the tip

#43 Tony Montana on 07.17.22 at 6:08 pm

Tony Montana wisdom is actually the manual for our leaders on what to do? They are repeating what I said and doing it to the sheeple I call by an insect name.

Let me remind you what I said (no swear words), and you tell me.

“I always tell the truth. Even when I lie.”

“Don’t underestimate the other guy’s greed!”

“You know what capitalism is?” Getting screwed!

“The only thing in this world that gives orders… is balls.”

TurnerNation…having nothing and being happy along with being in lock-up is what has been achieved with us last 2 year, and what you say the reset future is about – I described it for them too!

“You wanna work eight, ten hours? You own nothing, you got nothing! Do you want a chivato on every corner looking after you? Watching everything you do? Everything you say, man? Do you know I eat octopus three times a day? I got ctopus coming out of my ears. I got the Russian shoes my feet’s comin’ through. How you like that? What, you want me to stay there and do nothing?”

#44 T on 07.17.22 at 6:19 pm

#13 Paul on 07.17.22 at 3:26 pm
If you’ve got a mortgage, if you’re considering making a major purchase, or you’re a business and considering making an investment, you can be confident rates will be low for a long time.” – Tiff Macklem during the pandemic.
————————————————————————————————
Maybe Tiiff was or is the liar?

————

2 years at emergency rates is a long time. Rates are still historically low even after the increases. Hard to see how he was lying.

#45 In Flat Ion on 07.17.22 at 6:20 pm

Let me tell you why leaders world wide want inflation.

Prices of assets have gotten way ahead of themselves.

Debt it epic.

They love the high dollar values, because along with it tax amounts are higher on everything.

Something went up in price from $10 to $15? Well, that 13% HST is now $1.95 not $1.30 – same 50% boost.

Price of house stays high? Well, that’s lovely for those land transfer taxes, isn’t it.

Now you need increase in salary, well that’s good for the tax brackets that aren’t being adjusted – or are they?

They love what they’ve done here.

This is all according to plan. TAX TAX TAX TAX TAX!

Or rather, Tax: duty, cost, fine, levy, expense, tariff, inflation.

Inflation is such a lovely scam, isn’t it?

3% or 3.5% is supposed to stop 9% or 10% inflation Garth?

Unicorns, and rainbows and pixies, OH MY!

What’s next? You don’t think we’re about to have an exciting winter as far as energy is concerned?

Stupid western democracies, do they think Putin goes shirtless because he doesn’t know how to flex? Meanwhile, Biden is out there licking boots, kissing butts for oil.

Get your bicycles tuned up and winter ready.

I recommend an all purpose rack and pannier bags now before there is no stock available. Backpacks aren’t comfortable on bicycles.

#46 Tony Montana on 07.17.22 at 6:24 pm

#44 T

Maybe Tiiff was or is the liar?

Tiff always tells the truth, even when he lies.

#47 DC on 07.17.22 at 6:58 pm

Not a fan of PP myself, but it is hard to imagine a leader who is more divisive, narcissistic and inept than JT. Just sayin’.

#48 45north on 07.17.22 at 7:01 pm

i>Mostly we agree. On the weekend Ryan shellacked the Bank of Canada for failing to foresee a surge in the cost of living, and looked at the implications of the outsized 1% hike in the key lending rate last week. Not good for assets, from stocks to houses. He also mused on the potential of the CB ramping back its aggressive tightening in ’23.

everybody was lulled into a stupor. Inflation sneaks up on you. Nobody notices until it’s too late. Also lowering interest rates makes you look like a genius. Assets go up but carrying costs stay low which is why interest rates have gone down for the last 40 years. So now inflation is the problem and the answer is higher interest rates. It took 40 years to get to this point and it’s going to take years to fix the problem. This is a sea change.

#49 Victor Llearna on 07.17.22 at 7:15 pm

Victor Learn a word today. circumspect, I thought it has something to do with circumcisions’, but it means something totally different.
Housing sheep should have been more circumspect before getting involved in bidding wars and paying more than double what the property is worth!

#50 In Flat Ion on 07.17.22 at 7:20 pm

#17 Diamond Dog

My point is that the U.S. Federal reserve is politicized, I’m convinced of it and by proxy so is our CB in Canada but not the way Poilievre describes.

Even worse then? Once Canadian CB is just a subsidiary of US Fed?

As if these dollarettes weren’t insulting enough.

#51 The General on 07.17.22 at 7:22 pm

Many truth tellers dwell here. Garth didn’t need a bail out like the rest of Canadian msm, our taxpayer funded propaganda organs. Don’t bite the hand that feeds you, right?

#52 cuke and tomato pickere on 07.17.22 at 7:24 pm

The latest rumor coming out of Penticton B.C. is that
Jagmeet Singh will be the next premier of British
Columbia.

#53 Linda on 07.17.22 at 7:27 pm

Garth, have to say it seems like a lot of folks misinterpreted your ‘Rule of 90’. I think they thought you were recommending ‘investing’ 90% of their net worth in RE, not whatever percentage they’d get if they deducted their age from 90. Or maybe they thought, what the heck, if we buy now we will have paid this sucker off by age 90:)

#54 tkid on 07.17.22 at 7:34 pm

https://www.youtube.com/watch?v=WxW0A1IuWkY

3 realtors discuss the current state of the real estate market after the 1% shock increase. It includes tidbits on realtor’s dirty tricks, their opinions on stats published, on real estate bears and how the war in the Ukraine will be over before the winter.

It’s astonishing how freely they talk in a public forum.

#55 The General on 07.17.22 at 7:40 pm

So, Europe’s largest food exporting country (Netherlands), is paralyzed by farmer revolts. Cue eerie silence from our msm. Spreading to fishers and truckers, and also to Italy and Poland. Germans are being schooled on showering less and the fine art of chopping wood. Strange times.

#56 Ponnaps on 07.17.22 at 7:44 pm

Time to have a team huddle..

Btw minor correction..it’s not developing but redeveloping nations… after being looted no end by the currently developed ones.. 45 trillion in wealth is whats estimated from India alone..

#57 Doing my Part on 07.17.22 at 7:53 pm

One old guy in Penticton tells another old guy in Sidney Jagmeet will be premier of BC and we have an official rumour, yah right.
You should know better.

#58 Damifino on 07.17.22 at 7:56 pm

Europe is facing a mother of an energy crisis.
—————————-

A crisis largely of their own making which they’ve been engineering for a decade or more.

#59 Doing my Part on 07.17.22 at 7:58 pm

My rumour is Jagmeet and Trudeau are finished after the next election. Both have proven there are incapable of running anything but their mouths.
Very similar in nature, all show, no go.

#60 T-Rev on 07.17.22 at 8:01 pm

Inflation will be brought under control over the next year. The CBs have no choice but to do so, and it won’t take a lot more tightening to squish demand. Another couple points. As rates crest, the recession hits, and inflation fals within target, government bond yields will fall. They’ll never fall back to 0.5% without more QE, but they’ll fall. 2.5-3% (where they are now) is a probable range by 2025. This will yield fixed mortgage rates of 4.5-5%, give or take. Variable rates may stay higher, with little spread between them, and fewer and fewer variable rate mortgages as a result. But the steerage section shouldn’t get too giddy about rates tool the moon- they won’t go there. Why? Because the economy will collapse long before 10% money. Once it collapses, inflation takes care of itself because no one will be buying anything except food and gas. So even if energy prices continue to rise (they won’t indefinitely, and don’t for a minute think that if they continue to go vertical the JT/JS bromance won’t step in with a new NEP to take the pressure off Canadian households by providing subsidized energy at some point long before people are freezing and starving) the price of everything else is going to start to fall as demand collapses. So cheer all you want, but a return to your daddy’s 80s ain’t in the cards. Interest rate sensitivity, in terms of the effect of rates in economic activity, is higher today because of the amount of debt. At 20% rates like in 1980, half the country under the age of 50 will be bankrupt, no exaggeration. Even at 15%, I bet a full 25% of households under 50 go belly up. That’s a lot of people on the street and in the breadline, and inflation won’t be a thing.

Now I don’t know everything, but seems to me that this the likely case is demand destruction once rates go up another 2-3%. That puts variable loans at 5.5-6.5%, and fixed at 6.5-7.5%. High by recent standards, normal by historical. And I think this will be the peak, and not a long term plateau- expect inflation to moderate, and at least the fixed rates to come down.

Let’s do a final thought experiment for the day- let’s say energy prices DO continue upward, due to geopolitical forces and a decade of western under-investment in fossil fuels. Interest rates keep rising, demand destruction for non-essential goods and services occurs, but because energy underpins all our manufacturing and transportation prices of most things, particularly food and transportation, continue upwards. If rising rates cannot temper energy cost increases, then why raise rates? As some point, if this truly is mostly an energy shock inflation, I would say policy makes have to admit defeat if the only thing still rising is energy and the energy component of goods and services, and drop rates. If oil goes up 40% per year whether rates are 2% or 20%, might as well have 2% interest rates. You’ll need them, actually, in order to have a functioning economy.

Garth always says it’s not different this time, and I agree. The long term deflationary trend of aging demographics isn’t going away. What we’re seeing now is the washing out of the Covid stimulus, free payments, QE, low rates, the wealth effect this caused, etc. Once we’ve worked through this, inflation will disappear as quickly as it arrived, and the long term trend toward low inflation and rates will return, and the prices of homes across the country will look very much like they did in December of 2019. It’ll be bad for Covid buyers in bunnypatch, but a home in Toronto or Vancouver will still be out of reach for most of the population unless land supply, zoning and development are addressed.

#61 Garthdrone on 07.17.22 at 8:24 pm

Garth, would you suggest dollar cost averaging into high quality bank stocks if you are about ~65% cash?

Buy ETFs, not individual equities. And DCA doesn’t work. – Garth

#62 Lower the Boom...er not on 07.17.22 at 8:36 pm

A new phrase?…

“The Nation’s leaders will pretend to tell us the truth, and we will pretend to believe them”.

…until (fill in the blank)?

#63 THE DANDADA on 07.17.22 at 9:10 pm

Believe what you see. There was no way rates were staying at less than 1%. We told you so repeatedly. – Garth
—————————————————————-

You ain’t the Fed Garth. Were not paying YOUR salary.. were paying THEIR salary.

and they LIED to us!!

Stone-cold LIARS!!

Rates are extremely low by historic standards. Stop bring a drama queen. – Garth

#64 truefacts on 07.17.22 at 9:33 pm

“Tiff, our CB boss, cannot be held responsible for inflation (Poilievre is lying to you) and the interest rate ballooning is necessary.” – Garth
______________________________________

And yet Pierre was asking about inflation and rising interest rates back in 2020, but Tiff just brushed it off.

https://www.youtube.com/watch?v=WrTTKEIHDC8

#65 I don't know on 07.17.22 at 9:54 pm

All the big banks are now counting on rates falling immediately after this tightening cycle. Not as low as they were in 2020/2021, but lower than where they will peak (likely around 5-7%).

People holding cash (junk) are losing purchasing power by the minute. It’s always the same. They will miss the bottom because of their greed and end up griping on here and other social media about “what’s coming”. Have cash (junk) on hand? Now is a good time to use it.

The USD? As usual only people who spend too much time on social media thought the USD was anything other than the top currency worldwide. Predictably they were wrong. Again.

Houses? Anyone who needs a place to live and can afford it will never go wrong buying. Waiting has benefitted no one and will continue to benefit no one (as long as you can afford to buy).

IDK

#66 Doug t on 07.17.22 at 10:08 pm

#52 cuke and tomato

Hahahahahahahahahhahahahahahahahahahahahhahahahahahahahahahahahhahahahahaha – if that happens we are totally a LOST PROVINCE

#67 Observer on 07.17.22 at 10:24 pm

#39 Chameleon on 07.17.22 at 5:39 pm

“In Canada, cats are the number one cause of death by a long shot, killing an estimated 100 to 269 million birds per year, according 2013 studies in the journal Avian Conservation and Ecology.”

^^^^^^^^^^^^^^^
Cats don’t kill birds. Irresponsible cat owners do.

#68 Paul on 07.17.22 at 10:29 pm

63 THE DANDADA on 07.17.22 at 9:10 pm
Believe what you see. There was no way rates were staying at less than 1%. We told you so repeatedly. – Garth
—————————————————————-

You ain’t the Fed Garth. Were not paying YOUR salary.. were paying THEIR salary.

and they LIED to us!!

Stone-cold LIARS!!

Rates are extremely low by historic standards. Stop bring a drama queen. – Garth
————————————————————————————————
Yes,rates are extremely low by historic standards.
The only issue is the debt private and Government is the highest by any standard!

#69 Don on 07.17.22 at 10:32 pm

#65 idont know. Sorry I must disagree. In 1988 my wife and I decided to wait. The property we bought in 1993 for 232 000 had sold in 1988/89 for 575000. We saved 60 % by waiting

#70 David on 07.17.22 at 10:33 pm

Garth, Diamond Dog could fit in as your macro strategist, not only can he express himself clearly but also has excellent grasp of current macro issues.

Always enjoy his commentary.

#71 willworkforpickles on 07.17.22 at 10:53 pm

BANNED (Abusive)

#72 T-Rev on 07.17.22 at 11:09 pm

@ Diamond Dog:

Post more please. Love it when someone intelligent shows up in the comments.

#73 willworkforpickles on 07.17.22 at 11:24 pm

The dollar is in demand in countries where inflation is below the 15 percent the dollar is up YoY.

In real terms , inflation is on pace with the PPI, the real and accurate indicator to gauge inflation at 18.2 percent … twice that of the rigged CPI.

Domestically speaking , inflation has in real terms outpaced the dollar and is only in demand in those countries where real inflation levels are still below the 15 percent year over year dollar rise.

In effect , the dollar is being driven higher by these foreign buyers while this lasts and is not a hot deal for Canadians to own where the real inflation rate is at parity and climbing.

#74 gregonomic on 07.17.22 at 11:36 pm

I struggle with the rule of 90.

Let’s say I’m 50, so I should have <=40% of my net worth tied up in a house

If I have $1 million in financial assets, how much can I afford to spend / borrow?

$200k down on an $800k house leaves me with a net worth of $400k ($200k equity in house + $800k financial assets – $600k mortgage), so I'm at 50%? ie. Breaking the rule.

But $200k on a $700k house is OK? (Net worth is $500k, 200 / 500 = 40%)

And how much future income should go to financial assets vs the house. If I pay off the house at age 70, and, for argument's sake the value of the house has stayed the same, I would want that $700k to represent 20% of my net worth. So I would want my net worth to be $3.5 million, $2.8 million of which is in financial assets?

#75 Nonplused on 07.17.22 at 11:43 pm

Rick Ackerman had an interesting point today:

“If you think of deflation as an increase in the real burden of debt, you’ll begin to understand it better than most eggheads. They say it’s a decrease in the money supply, and although that’s technically correct, it is a useless concept because no one has the foggiest notion how much money is out there.”

So ya, we are going to get some deflation, at least for the next few years, particularly in debt backed assets like housing. There is the old adage that something is only worth what someone will pay for it. Trouble is we have this system where we mark the value of everything from stocks to houses to Bitcoin to gold, oil and other commodities to the last trade, every day (well “settle” actually, but there isn’t much difference). Billions upon billions of dollars in “wealth” are created and destroyed every day just by the changes in “mark to market” this causes. And what the spreadsheet giveth, the spreadsheet can taketh away.

So the real problem is going to be that as interest rates approach 3, 4, 5 and even 6% (yes they will, 3% rates cannot tame 8% inflation, look at the 70’s and 80’s), nobody is going to be able to borrow the money necessary to keep these asset prices propped up. And when the houses sold at the margin start dropping in price, the spreadsheets recalculate the so-called value of all the houses. All that money we had on the spreadsheets in “equity” just disappears. Just like that. All the “wealth” families had supposedly built up simply by buying a home vanishes into the ether from which it came. But oh well, that’s how it got there in the first place, so easy come easy go.

So soft landing? I don’t think so, unless the 80’s were considered soft. The people and corporations who have debt are going to find it increasingly difficult to service. But rates must rise or inflation will rise, even higher than it is now. It’s a matter of picking our poison.

#76 Janice Farmsworth on 07.18.22 at 12:04 am

If you’re “ a balanced guru” then accusing ‘Pepe’ of lying ( which is quite a dishonest statement in itself) without also including one of Trudeaus lies on the same topic is fairly disingenuous. Tiff is to blame for Canadas mess. He went along with the WEF spendorama like a blind pup on the tit. He didn’t have to acquiesce to Trudeaus ballooning demands . Nancy Reagan said it best “ Just say no”. But Trudeau and Tiff didn’t say no to the globalist purge of sanity, instead they threw open the doors to hells fiscal asylum. So no, “ Pepe” isn’t lying, he’s pointing fingers at the real culprits and not blaming Trump or Putin for the mess our political dullards got us into. Trudeau/Tiff/Freeland had the ATM card and used it, not Pepe or Putin or Covid. Children make excuses, adults fess up.

#77 Robert Ash on 07.18.22 at 12:54 am

I am with comment Number 8 except the implied criticism. I think Central Bankers, are incompetent. They certainly saved the day in 2008, but there was no reason, to not telegraph to all Global economies, the intention to increase emergency rates, from almost zero, or in some cases negative rates, to a more normalized balance. The only control, or responsibility for wealth, is determined by the cost of capital in a Capitalistic system. To remove that is like repealing Gravity. Buffet actually commented Interest rates, are like Gravity. Politicians, should be taught a lesson, and summarily fired. Too important a decision, to fail, and they certainly did… Macklem overspoke, and should resign. Time for accountability.

#78 Dr V on 07.18.22 at 2:06 am

36 Keith

Interesting.

#79 Philco on 07.18.22 at 2:38 am

DELETED (Language)

#80 Philco on 07.18.22 at 2:48 am

#66 Doug t on 07.17.22 at 10:08 pm
#52 cuke and tomato

Hahahahahahahahahhahahahahahahahahahahahhahahahahahahahahahahahhahahahahaha – if that happens we are totally a LOST PROVINCE

The Guys the biggest socialist idiot Ive ever seen.
Stick a fork in us if so. Ill selll al my props in 5 mins if that happens.
MY LAND TAX BILLS RUnnING $70,000 now and thats the coast. (cheap) Maybe $14 mil in sheds. If these pigs continue Im outa this shithole country. These clowns run business outa town till theirs jack shit left to support the socialist cause. Comprende?
The slippery slope has arrive dumbos

#81 Wrk.dover on 07.18.22 at 6:14 am

#31 Penny Henny on 07.17.22 at 5:04 pm
#12 Doug t on 07.17.22 at 3:24 pm
I’m following Garths advice – visiting my brother for 10 days in Welland – boat on the dock in his backyard and fishing everyday………chill while the storm thunders
//////////////

Go to Handlebar Hanks for pizza. Awesome.
__________________________________

Head west on the river (or river road) to the 2X4 for breakfast!

#82 Randy on 07.18.22 at 7:22 am

DELETED

#83 Dharma Bum on 07.18.22 at 8:44 am

#14 I’m Stupid

New homes normally took 3-4 weeks for framing now it’s taking 1.5-2 months. What use to be 3-4 trades working on a home is now 1 trade every 2 days.
—————————————————————————————————————

Tell me about it, man!

My new-build started last October and it’s nowhere close to being ready. Trades show up sporadically, work a couple of hours, then disappear. Nobody will commit to a schedule or a timeline. “I’ll se ya when I see ya”.

The house next door started being framed at the beginning of June. It’s still being framed. So, 1.5 – 2 months is right. Most of the time there are only 2 guys working on it. They pack up at 3 pm, and on Fridays at 1 pm (if they even show up on Fridays).

The builder’s favourite answer to questions about when something is going to be done is “I dunno”.

Oh well.

Lucky I’m in no rush.

Bumming is not urgent.

#84 TurnerNation on 07.18.22 at 8:48 am

Interest rates will pale compared to grub.
Watch the food supply.
It’s a matter of When not IF this be rolled out into all the countries.

March 2020 — all human behavior fell under global control. Feeding, Breeding, and Travel/Movement.

Say we almost back to normal yet??

— What’s going on in Sri Lanka? Control over Feeding — a test zone?

https://kanekoa.substack.com/p/sri-lankas-green-new-deal-brings

What happened after Sri Lanka banned chemical fertilizers?
On the latest episode of the All In podcast released last Thursday, tech billionaire and CEO of Social Capital, Chamath Palihapitiya, who is a Sri Lankan-born Canadian and American citizen, discussed the collapse of Sri Lanka with PayPal Mafia member and co-host, David Sacks.

Palihapitiya told Sacks, “Somewhere along the way the leadership of Sri Lanka decided that they were woke and so they enforced every farmer to go organic.”
“The problem with going organic and organic fertilizer was all the small farms shut down, all of the large farms had 20 to 30 percent crop yield reductions, and the prices of food went crazy.”

Wall Street Journal:
Rice production fell by 20% in the first 180 days of the ban on synthetic fertilizer. Tea, Sri Lanka’s main cash crop, has been hit hard, with exports at their lowest level in nearly a quarter-century. Farmers left a third of all farmland fallow. Food prices soared as a result of scarcity and Sri Lanka’s people, their pockets already hit by the pandemic, began to go hungry.

#85 Dogs Not Barking on 07.18.22 at 9:05 am

One wonders how long it will be before the Greens are thrown under the bus by the political elite?

It’s already starting in Europe as the Greenies take the blame for the energy carnage settling around the politicians ears.

My guess is that somewhere around January or February the Greens will be declared persona non grata in Europe.

Trudeau will then have to decide whether to continue taking his energy policy from a Tik Tok addled teen age girl or professional engineers who know how to make things work.

#86 TurnerNation on 07.18.22 at 9:15 am

Slowing winding down the Former First World Countries.
“But muh Hospital Capacity’!
Our rulers care about our health guys they really do:

.Multiple B.C. hospitals scaling back ER services due to staff shortages (globalnews.ca)

.Minister says hospital in Kamsack, Saskatchewan, will re-open when staff shortages resolved (theglobeandmail.com)

——Life in our Crowded and Fetid “UN Smart Cities”.
Think this is set to improve? Just another theatre of WW3.

.Toronto: ‘Any gun violence unacceptable’ Tory says after rash of weekend shootings (cp24.com)

—– Life in a Former First World Country. Australia. How can these be the government was to make them SO health with all the ‘rules’?

https://www.theguardian.com/world/2022/jul/16/not-just-another-wave-australias-covid-hospitalisations-reach-record-levels-in-several-states
“Hospitals across the country are “bursting at the seams” as the number of people being admitted with Covid-19 reaches record levels in several state”

#87 @J on 07.18.22 at 9:18 am

#61 Garthdrone on 07.17.22 at 8:24 pm
Garth, would you suggest dollar cost averaging into high quality bank stocks if you are about ~65% cash?

Buy ETFs, not individual equities. And DCA doesn’t work. – Garth
————————————————

According to one study, “Lump-sum investing outperforms dollar cost averaging 75% of the time for stocks and 90% of the time for bonds”.

But, DCA can help take emotion out of investing for those who just seem to hold cash most of the time.

https://www.experian.com/blogs/ask-experian/dollar-cost-averaging-vs-lump-sum-investing/

Emotion is your enemy. Get over it. – Garth

#88 Chameleon on 07.18.22 at 9:35 am

#67 Observer on 07.17.22 at 10:24 pm
#39 Chameleon on 07.17.22 at 5:39 pm

“In Canada, cats are the number one cause of death by a long shot, killing an estimated 100 to 269 million birds per year, according 2013 studies in the journal Avian Conservation and Ecology.”

^^^^^^^^^^^^^^^
Cats don’t kill birds. Irresponsible cat owners do.

^^^^^^^^^^^^^^^

I do highlight humans are the problem.

Look, it’s the EXACT same issue with dog owners.

I don’t know any bad dogs.

I do see plenty of bad humans turning their dogs into a version of themselves.

Dog takes himself to a beach where dogs are not allowed?
Dog doesn’t pick up the poop after himself like he should?
Dog is off-leash in an on-leash area?
Dog says he should be allowed to do these things because he’s a special dog?
Dog exploits the Emotional Support Animal certificate so that he can be places where he shouldn’t just because?

What did the animal do? Nothing.

It’s the human 100%.

I guess we can conclude without reservations: Human is the problem animal, unwilling to look back at itself and correct the wrongs, improve, be better, do better. Human just keeps doing the same crap looking for ever better excuse to justify it.

#89 NoName on 07.18.22 at 9:36 am

Hey Potable Pint

I found you very good IPA, is all at a same time refreshing beverage, salad and borderline beer. This IPA is kind of a jack of all trades, master of none, but oftentimes better than a master of one. You’ll just have to get Jane48 to hook you with some, on a her side of pond.

https://twitter.com/MM0OPX/status/1548672075237392385

#90 Re-Cowtown on 07.18.22 at 9:44 am

It looks like Putin did as expected: Force weak-kneed Trudeau into breaking the sanctions and giving him back his natural gas compressor turbines and then shutting down gas to Europe anyway.

https://www.zerohedge.com/energy/gazprom-declares-force-majeure-will-halt-gas-flows-germany-indefinitely

My guess remains the same; those turbines will be redeployed to increase natural gas sales to China and India.

From Putin’s perspective, selling natural gas to Europe in the middle of the Ukraine War is like the Americans continuing to sell oil to the Japanese after Pearl Harbor.

Before the naysayers call my analogy faulty, just bear in mind that it doesn’t matter who fires the first shot in war, it only matters who can keep shooting when the other side runs out of ammo.

#91 Penny Henny on 07.18.22 at 9:53 am

#87 @J on 07.18.22 at 9:18 am
#61 Garthdrone on 07.17.22 at 8:24 pm
Garth, would you suggest dollar cost averaging into high quality bank stocks if you are about ~65% cash?

Buy ETFs, not individual equities. And DCA doesn’t work. – Garth
————————————————

According to one study, “Lump-sum investing outperforms dollar cost averaging 75% of the time for stocks and 90% of the time for bonds”.

But, DCA can help take emotion out of investing for those who just seem to hold cash most of the time.

https://www.experian.com/blogs/ask-experian/dollar-cost-averaging-vs-lump-sum-investing/

Emotion is your enemy. Get over it. – Garth

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

and perfect is the enemy of good.

There is nothing good about emotion when investing. Fear and greed lead everyone succumbing astray. – Garth

#92 Penny Henny on 07.18.22 at 9:56 am

#31 Penny Henny on 07.17.22 at 5:04 pm
#12 Doug t on 07.17.22 at 3:24 pm
I’m following Garths advice – visiting my brother for 10 days in Welland – boat on the dock in his backyard and fishing everyday………chill while the storm thunders
//////////////

Go to Handlebar Hanks for pizza. Awesome.

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

and they allow dogs on the patio

#93 DON on 07.18.22 at 10:44 am

#76 Janice Farmsworth on 07.18.22 at 12:04 am
If you’re “ a balanced guru” then accusing ‘Pepe’ of lying ( which is quite a dishonest statement in itself) without also including one of Trudeaus lies on the same topic is fairly disingenuous. Tiff is to blame for Canadas mess. He went along with the WEF spendorama like a blind pup on the tit. He didn’t have to acquiesce to Trudeaus ballooning demands . Nancy Reagan said it best “ Just say no”. But Trudeau and Tiff didn’t say no to the globalist purge of sanity, instead they threw open the doors to hells fiscal asylum. So no, “ Pepe” isn’t lying, he’s pointing fingers at the real culprits and not blaming Trump or Putin for the mess our political dullards got us into. Trudeau/Tiff/Freeland had the ATM card and used it, not Pepe or Putin or Covid. Children make excuses, adults fess up.

********

It’s not a competition…Pepe is still a liar.

#94 T on 07.18.22 at 10:55 am

#67 Observer on 07.17.22 at 10:24 pm
#39 Chameleon on 07.17.22 at 5:39 pm

“In Canada, cats are the number one cause of death by a long shot, killing an estimated 100 to 269 million birds per year, according 2013 studies in the journal Avian Conservation and Ecology.”

^^^^^^^^^^^^^^^
Cats don’t kill birds. Irresponsible cat owners do.

————

You might want to look into the feral cat population

#95 crowdedelevatorfartz on 07.18.22 at 11:13 am

@#83 Dharma
“The builder’s favourite answer to questions about when something is going to be done is “I dunno”.
+++
Yep.
Im in Halifax this week.
LOTS of construction.
Serious lack of trades.
Same everywhere across Canada.
A prolonged recession will deal with it.
Long over due.

#96 Some guy on 07.18.22 at 12:02 pm

I run a company. World class clients. Absolute top end. Forbes List type guys. My cost of capital is 15%. Even higher if I want to factor a receivable from a Triple A rated client (like the US federal gov’t).

Meanwhile, here in Canada you can borrow a million bucks for some run-of-the-mill, crappy Mattamy drywall barn with chipboard counters in a B market for what is effectively a negative interest rate (i.e. the interest rate is lower than the rate of inflation).

These are all the wrong price signals and all the wrong incentives. It’s one of the reasons manufacturing in this country is on its knees and dying. Not sure how we think we’re going to be paying the bills in the future.

#97 Felix on 07.18.22 at 12:43 pm

Ahead?

With a dogawful mutt at the wheel?

Never to happen.

Just look at the photo – it’s July, and all the leaves are already dead and fallen off the trees. Thanks, dog.

#98 TheDood on 07.18.22 at 12:53 pm

#13 Paul on 07.17.22 at 3:26 pm
If you’ve got a mortgage, if you’re considering making a major purchase, or you’re a business and considering making an investment, you can be confident rates will be low for a long time.” – Tiff Macklem during the pandemic.
————————————————————————————————
Maybe Tiiff was or is the liar?

___________________________

Tiff is no swami. And Tiff didn’t hold a gun to anyone’s head telling them to borrow huge amounts of money did he? The only person to hold responsible for a huge debt load is the person who signed on the line – which is dotted!

#99 Nonplused on 07.18.22 at 12:53 pm

Uh oh.

https://babylonbee.com/news/officials-announce-they-put-the-decimal-in-the-wrong-place-inflation-actually-91?utm_source=The+Babylon+Bee+Newsletter&utm_campaign=9786df2136-Sponsored_Newsletter_7%2F18%2F22&utm_medium=email&utm_term=0_62f636e998-9786df2136-40180135&mc_cid=9786df2136&mc_eid=58aa52463c

#100 Calgary on 07.18.22 at 12:58 pm

https://ca.yahoo.com/news/landlords-struggle-evict-tenants-turned-080000627.html

Only in Canada?

#101 Johnny Debt on 07.18.22 at 1:08 pm

#96 Some guy

Not sure how we think we’re going to be paying the bills in the future.

—-

Some guy, you cray cray!

You’re not sure how we’re going to pay the bills?

Who cares?

Our leaders don’t care about how we’re going to pay the bills.

Neither do the voters. They just want a crumb.

If you think about it…

Government, politicians, voters…it has parallels to a parent and a child.

Parents gives their child a credit card to teach them about money and spending it. Of course, the choice of tool is already a big mistake.

Child takes credit card and spends as they way on things that are important to them. New kicks. AirPods. Bubble Tea. New scooter. New MacBook Air is out! Dumb parents, forgot to put a limit on the card!

Parents find out when the bill comes and are furious. Grounds the child, takes away the credit card. “Honey, I told you this was a mistake!” “How could she spend our money so irresponsibly?”

Now…introduce The Government into this example.

Now suddenly, the Parents (Government) have given themselves a no-limit credit card, issued by themselves, to themselves, on behalf of their under appreciative spoiled children – because THE CHILDREN will get the bill! SWEET!

Voter Parents, being the prudent spenders they are, vote in people who will take the spending decisions on the credit card. Responsible people, who will do good and watch that credit card spending close.

But these people spend as they wish, just like the children. They don’t buy anything meaningful, like hospitals, infrastructure, good quality new rental stock housing. They just spend on parties and votes and other miscellaneous things you need not worry yourself about. Friends charity here. Friend’s construction company there. Don’t worry about it.

The credit card bill is HUGE now. SUCKS! NO WAY to pay that off! We can hardly afford the minimums and they are going up fast. But who cares? We’re not the ones getting the bill!

We structured it so these dumb irresponsible children will deal with the bill.

For now, let’s worry about this week, this month, this quarter at most. Who cares what will happen next year?

And that boys and girls is the real FOMO…FOMO of Parents having a great time while we can at the children’s expense.

No one likes a party pooper Parent telling them spend too much on things they don’t need. And children are to young and dumb to know any better. Or most importantly to vote.

#102 The Onion on 07.18.22 at 1:49 pm

#99 Nonplused on 07.18.22 at 12:53 pm

Uh oh.

What’s next? Links with data from The Onion?

#103 Housing is a Human Right! on 07.18.22 at 1:52 pm

#100 Calgary

https://ca.yahoo.com/news/landlords-struggle-evict-tenants-turned-080000627.html

Only in Canada?

—-

You want to be a landlord? You are providing a human right to someone.

Now these landlords want to take it away?

Those tenants have the Human Right to Housing.

Not Human Right to Housing for a price, a cost, a monthly subscription.

They have to pay nothing because the Human Right to Housing is not on monthly subscription basis.

#104 Bdwy on 07.18.22 at 1:55 pm

67 Observer on 07.17.22 at 10:24 pm

#39 Chameleon on 07.17.22 at 5:39 pm

“In Canada, cats are the number one cause of death by a long shot, killing an estimated 100 to 269 million birds per year, according 2013 studies in the journal Avian Conservation and Ecology.”

^^^^^^^^^^^^^^^
Cats don’t kill birds. Irresponsible cat owners do

………
Well a few. Far more are killed by future kfc customers. Birds….Yum.
16 birds died for the pot of paella on my stove right now.

My unleashed dog keeps the cats on their toes. She us allowed to chase them until they go onto private property.
Git that kitty!

#105 For all the Canadian lemmings on 07.18.22 at 2:00 pm

Oil has crashed today…loool

Maybe on your planet. Here on earth crude surged 4% today. – Garth

#106 Bdwy on 07.18.22 at 2:22 pm

Market finds a worm inside apple today .

//////

Costco remains garth’s favorite shopping experience. Keep watching this stock…

#107 PBrasseur on 07.18.22 at 2:29 pm

Want a glimpse into the future now that printing money has reached its limits? Well just look at the Canadian health care system crumbling in several provinces, likely more to come.

That’s a mere example of what the future looks like in your regular welfare state. Consequences will be far reaching and frankly incalculable.

#108 Bdwy on 07.18.22 at 2:31 pm

Oil about to retake 100 level.

130 to 150 before this is over.

#109 Victor V on 07.18.22 at 2:36 pm

update from my local lunch spot filled with an assortment of developers, builders, realtors, and investors……

“it will be like 1989/90.”

https://twitter.com/d_demelis/status/1549061241653661696

#110 Philco on 07.18.22 at 2:43 pm

Sorry Garth
I was so fired up.

#111 Calgary on 07.18.22 at 9:02 pm

#103 Housing is a Human Right!

If you want to buy, you pay the mortgage. If you want to rent, you pay the rent. That’s human right……human right to choose. Don’t want to pay the mortgage, foreclosure. Don’t want to pay the rent, eviction. You don’t rent a house, refuse to pay rent and convert the house into cubicles to rent out for rentals. This is the most ridiculous thing I have ever came across. Canada needs better government.

#112 What the Heck was That? on 07.18.22 at 9:38 pm

Can someone please translate #43 Tony Montana for me?

Either he’s on crack or… am I?

#113 Greg on 07.18.22 at 11:13 pm

I’m making a note to ignore the doom and gloom and stay invested. Amzn an Goog post split look interesting.

#114 chalkie on 07.19.22 at 3:35 pm

The Dive of Real Estate Prices has only started, the real tears won’t begin to flow until late 2022 or early 2023. There are so many remorse stories currently on the go, its hard to begin any story of pity, because by the time you finish writing, the same story has already gotten worst.
I suspect many real estate agents will be looking for a carry over income until the market stabilizes again, will let me tell, its going to be a long wait this time around, winter will come and go twice before any clear sky’s presents good news for the over payers. As our parents told us many times, a fool and their money soon parts, you were so right so many times Dad & Mom, “Yes” and you are right once again. Was the adrenalin rush to overpay, greed or stupidity?