Shocking

Was it a shock markets went up along with interest rates yesterday?

Nah. Not here on the bridge of this pathetic blog. Made perfect sense.

To wit: rates jumped three-quarters of a point, instead of 1%. Strong, not crazy. Shows the central bankers are serious about inflation but unwilling to murder the economy. Second, Fed boss Powell gave hope this tightening cycle may start winding down later this year. So he, too, sees signs inflation may be peaking.

Third, inflation can be licked and a hurtful recession avoided – that’s the story markets are buying into. Evidence abounds – house prices are tanking, oil is cheaper, freight costs have dropped, used cars are plopping – and yet the labour market is strong and corp profits robust. Not too hot. Not too cold.

Fourth, the Fed is believable again. Powell admitted the CB screwed up by stimulating too much for too long. But now rates are up 2%, the US$ is raging and Mr.Market thinks a crappy European economy will help corral inflation while letting the US (and us) escape a deep downturn. A technical recession, yes. A bad one, no.

Said street vet Ed Pennock: “Markets liked how Powell communicated. Victory is now a small/mild recession. If inflation can come down gradually we can avoid a crash landing. By the end of the presser Powell was much closer to being in sync with markets. An amazing recovery.”

Hence, the Dow added over 400 points yesterday. The rally continued on Thursday. The broader S&P 500 is now down just 15% from its all-time high in January. Despite inflation. Despite war. Despite aggressive rate hikes. Despite Covid, monkeypox and Abba rising from the dead.

So have markets formed a bottom? Did people descend into a funk that caused them to needlessly turn paper losses into real ones? Was all that yammering about 1970s-syle stagflation, a debt-fuelled crisis and hyperinflation just online trash talk?

We have no idea. But it seems apparent rates can go up without the lights going out. The post-pandemic economy is strong enough to sustain monetary tightening, Putin, a wonky supply chain, real estate reckoning plus inflation.

The contraction in the US economy announced Thursday was weensy – 0.9%. “That supports the idea that any recessionary environment will be mild,” an E-trade investment strategist told Bloomberg.

Of course, a day, a week or even a month do not a market make. But gains are better than losses. A market with more confidence in the central bank is a good thing. And with every day that passes in this tightening cycle we get closer to the end. The betting is for sunny days in 2023.

By the way, stocks have been going up at the same time as bond prices. Yields are falling as the debt market attracts more money (the return is spectacularly higher than just a few months ago) and anticipates several quarters of slow economic growth.

Some people wonder if the lower return on a Canada five-year bond will translate into a rate cut for fixed mortgages. But that’s unlikely. Lenders (banks) have to match the return they pay on deposits – like five-year GICs – with the rate charged on home loans, plus a spread.

In fact, everybody knows the Bank of Canada will be hiking again just after Labour Day. So expect more pressure on mortgage rates. Especially impacted, as mentioned here this week, will be variable-rate loans. Monthly payments stay static, but we’re nearing the point where (for many borrowers) almost 100% of the money they pay goes to interest. Zero to repaying the debt. Hard to see how that’s different from rent, especially when the value of your house is flatlining or headed south.

Prediction: real assets and financial ones may be inversely correlated for the rest of 2023. Now that’s a shock, eh?

About the picture: “No need to inflate your ego further,” writes Pawel, “the steerage does a fine job everyday.  This is Sammy.  A Polish Lowland Sheepdog.  Much like his owners, he is shaggy, prefers the company of his immediate family, and dreams of being on acreage with some animals to take care of.  The gorgeous Okanagan will have to do for now. “

88 comments ↓

#1 DJT on 07.28.22 at 4:15 pm

The first step in solving The Recession Problem is admitting it exists. Something the WEF(ie. Liberals & Democrats) refuse to do.

#2 The General on 07.28.22 at 4:20 pm

The faith is lost. All with one impulse people rush to seize the gold itself as the only reality left – not only people as individuals; banks also, and the great banking systems and governments do it, in competition with people. This is the financial crisis.
Garet Garrett – 1932
For more enlightenment, please read his book The Bubble that Broke the World.
4 Quadrillion in derivatives await blowout stage.

#3 Penny Henny on 07.28.22 at 4:25 pm

Today’s dog photo. This is what I would imagine a Ponzie would look like.

#4 Apocalypse NOW on 07.28.22 at 4:26 pm

Webex is down globally.

https://status.webex.com/service/status?lang=en_US

Putin and Xi know what they are doing.

PREPARE

#5 Søren Angst on 07.28.22 at 4:32 pm

“No need to inflate your ego further,” writes Pawel, “the steerage does a fine job everyday.

-About Picture Pawel

——————–

Pontification.

Nobody loves me.

#6 NOSTRADAMUS on 07.28.22 at 4:41 pm

I SMELL SMOKE.
A real estate builders best friend when he is carrying way too much unsold inventory is the plumber who forgot to turn off his blow torch igniting the painters spilled paint thinner. This seems to happen on dark windy nights when no one is around. Next thing you know (POOF) half the unsold subdivision homes are going up in flames. Another accelerant with a bad history rap are the linseed oil soaked rags. Gotta put a million dollar shine on all that woodwork. History recorded (1989) that real estate speculation can quickly turn into a full blown crisis and liquidity problems can quickly turn into solvency issues. Mmm, is that smoke I smell? Steady lads, hold the line.

#7 Nihilist on 07.28.22 at 4:42 pm

HIKE some more! Hike it to 5% deposit rates and 8% mortgages!

Let the new couples FEEL THE BERN with higher mortgage costs!

Let the real estate prices COLLAPSE in the Greater Toronto Area!

Let it fall, let it fall, let it fall!

#8 Sail Away on 07.28.22 at 4:44 pm

Thanks be to Abba.

It’s been a fine few weeks in the markets. Tesla has roared back, as expected. No surprise there. Costco +20% in last couple months (hope you bought on my advice, Ponzie; I rarely dispense such gifts). The SA 2022 Heloc borrow to invest entered in May and June is +2%. The Berkshire buys in 14 family education funds have gained +7% in the last month. Tech is flying on yesterday’s US funding announcement. Closed out the Spirit Airline arbitrage for a big capital gains bill.

Still holding some dry powder, but put a lot of it to work Monday and Tuesday in broad market index ETFs (all + now).

Such fun (again!) riding the rocket after following the markets down. It’s almost like the exact same thing that always happens is happening again. My advisor-squirrel is infallible. Heh.

#9 Leon (judge says I'm buying microblogging site)Smuk on 07.28.22 at 4:44 pm

Real story about the picture: I’m wet, going to shake the water off but I can’t get you from there. I’ll wait until you come closer.

#10 Penny Henny on 07.28.22 at 4:46 pm

Some people wonder if the lower return on a Canada five-year bond will translate into a rate cut for fixed mortgages.=GT

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

I wonder what that lower return on 5 year bonds will do to rate reset preferreds. Can they go lower still?

#11 TurnerNation on 07.28.22 at 4:50 pm

Some of my fans get that my lines tend to be tongue-in-cheek. I mean it’s laugh or cry at this stage.

Fun fact before I post anything I tone it down by 50% and cut its length by a third.
Always post sobar, not bozzing ;-)

——
A little reminder that this is designed to be permanent. And that the forthcoming lockdowns will be electronic in nature (QR code). Almost back to normalcy?

“Recently, U of T reinstated the vaccination requirement for students and employees living in University residences. Students living in residences this fall will be required to have a primary series of a COVID-19 vaccine and at least one booster dose before moving in. ”
https://www.utoronto.ca/utogether/faqs?

—- Travel? Barely and it will be further tightened up.

.Airport COVID measures derail Israeli terror survivors’ trip to Canada’s Wonderland (nationalpost.com)

#12 Love_The_Cottage on 07.28.22 at 4:51 pm

#1 DJT on 07.28.22 at 4:15 pm
The first step in solving The Recession Problem is admitting it exists. Something the Liberals & Democrats refuse to do.
________________
Ok, let’s say you’re right. What’s the next step? What does the Gov’t of Canada do to avoid a recession in the current environment when there is a recession starting in the U.S. and Europe at the same time? Be specific, we look forward to your further insight.

#13 Soreness Angered on 07.28.22 at 4:59 pm

If cottagers don’t stay the hell out…is this what will happen to them?

https://nationalpost.com/news/shocking-video-shows-excavator-tearing-into-marina-in-exclusive-muskoka-cottage-country

#14 Dr V on 07.28.22 at 5:05 pm

Great post Garth. Definitely a balancing act.

#15 Linda on 07.28.22 at 5:07 pm

It does seem the markets like the latest Fed move. Regarding the cost of accommodation, read that rents in the GTA have jumped 20% for your basic one bed apartment as folks return to urban living. Average rent is now over $2,200 per month for said 1 bedroom. In addition to a sharp increase in rental pricing, it appears that the bidding wars for RE have crossed over into the rental market, with landlords being offered up to one years rent in advance by would be tenants hoping to secure a desired unit. The expectation is that rents will continue to increase as stock is limited & demand is expected to remain high. So much for ‘affordable’ housing!

#16 DC on 07.28.22 at 5:26 pm

@Sail Away, why give all your home runs away for free? Surely Warren, Charlie, and every hedge fund manager must be knocking on your door for your great ideas…most of our crystal balls are cracked and cloudy; please tell us where you got yours or at least let us know when the ego bubble pops, this way we can take cover. Lol

#17 Hubert Wolfeschlegelsteinhausenbergerdorffwelchevoralternwarengewissenhaftschafer on 07.28.22 at 5:28 pm

Savers need higher savings interest rates. If real estate prices fall and the Canadian bubble pops, then it’s none of my business.

Sucks to be the guy who just got married and overpaid for a starter home because of martial pressures!

#18 Big Bucks on 07.28.22 at 5:30 pm

I believe they are dead wrong to believe inflation is peaking.There is still a ton of free money/credit out there and this little rally in stocks is nothing but wishful thinking.Of course inflation will come down one day but not anytime soon.Check the grocery store—it’s getting worse and will be absolutely brutal in Nov/Dec.Of course the price of RE will be lower by year end but so will all the major stock indices too(significantly lower).

#19 Crystal ball futurist on 07.28.22 at 5:35 pm

The fed seems to be pulling off a “beautiful deleveraging” as mentioned by Ray Dalio.
We still need substantial income growth to reduce the debt burden, if we stick to that theory.
If prices keep on rising, corp earnings will steadily inch higher.
Another big push would be things calming down in Ukraine.
Hoping to see the markets rally to higher levels in the next 12 months.

#20 I'm a Dork, I know But... on 07.28.22 at 5:52 pm

How does this very recently opened up, roaring 20’s red hot economy, immediately fall into an undeniable recession even with manipulated inflation, GDP and unemployment statistics? Many analysts calling for at least 2 more quarters of negative growth which will trigger huge job losses if that actually comes to fruition.

Savings rate at a 14 year low, labor participation rate almost at all time low, the Fed still screwing around with the yield curve, propping up the stock market, and ballistic balance sheet with 2.25% interest rates in light of easily double digit inflation. All directly responsible for the mess we find ourselves in. Oh and the vast majority of the population pickled in debt with many skipping meals and trips to the gas station to make ends meet.

I don’t think busy airports for populations that were locked down like lab rats for over 2 years, trumps all of the above data.

Besides brain cells and wisdom teeth, what am I missing?

Logic. No ‘huge job losses’ are likely when companies are still making bank. Use your noggin. – Garth

#21 inflation is rampant on 07.28.22 at 5:53 pm

#10 Penny Henny on 07.28.22 at 4:46 pm
I wonder what that lower return on 5 year bonds will do to rate reset preferreds. Can they go lower still?
_____________________________________

rate reset prefs sold off because perpetuals did, as rates rose. perpetuals went from yielding 4.5% to 6%. they all move in tandem. now that rates are falling, perpetuals will rally, and so will rate rests.

as of last night perpetuals yielded 6.2%, equivalent to 8%+ interest. with a 2.65% 5 year canada, and long corporates 4.96%, you’d be silly not to buy prefs of all sort right now….

#22 Steven Rowlandson on 07.28.22 at 5:54 pm

I would imagine that dividends and capital gains would have to be rather substantial to get people who are normally house horny to go into the stock and bond markets with the same lust and greed as they normally do with real estate. Then again that would be a bubble and perhaps a dangerously real one at that.

People won’t change. Some will continue to build financial freedom. Some will be lemmings. – Garth

#23 Inequity on 07.28.22 at 6:00 pm

#4 Apocalypse NOW

Webex is down globally. Does anyone care/still use it?
Other than Putin and Xi that is.

You have a worse track record than a broken clock.

#24 G on 07.28.22 at 6:03 pm

Couldn’t Putin throw a huge wrench in an easy landing though with his control over Europe’s energy needs? Propaganda aside Russia has a massive bargaining chip there. Next winter could be a wildcard there. Also we all know COVID’s going to be a big deal again in a couple months.

#25 Warren-the-lagging_indicator on 07.28.22 at 6:16 pm

It sure seems that this market bump up is emotionally driven. Just look at the delta between tech earnings and oil companies including forward fundamentals and then look at the market action. Emotionally driven for sure. Makes for interesting trading if you are into that. I am not buying it, so staying clear of tech and sticking with the fundamentals with the quality oil companies for the manual fun part of the portfolio.

#26 Shawn on 07.28.22 at 6:21 pm

Think I’ll Go With the Crowd

People won’t change. Some will continue to build financial freedom. Some will be lemmings. – Garth

*************************************
People like to go with the crowd. They don’t like to stick their necks out.

Failing with crowd is deemed okay, failing on your own actions is too embarrassing.

Warren Buffett wrote many years ago (I’m an authority on Buffett BTW), something very close to the following:

“Lemmings as a species have a very bad reputation, but no individual lemming has ever gotten bad press.”

#27 Nonplused on 07.28.22 at 6:40 pm

In the end of the day though, the economy is a physical thing found in the real world. That’s right, physics! All economic transactions are actually physical transactions that result in the dispersion of energy. It consists of real materials, energy, and human action. Money isn’t real any more than math is, it is just an accounting trick we use to keep track of the physical world and who owes what to whom.

Thus, sometimes it helps give a view further into the future to look at the world from a physical point of view.

The results of doing that may be unsettling for some readers. Parental discretion is advised.

One of the largest inputs into the modern economy is energy. Much of that energy comes from fossil fuels. The availability of that energy at reasonable costs when compared to human effort is declining due to a number of factors including the Russia-Ukraine conflict, but the number one reason is depletion. In other words energy is getting more expensive because we’ve used up all the easy to extract stuff.

Remember the oil embargo in the 70’s? Ya, me neither, but Garth probably does. They were able to mute much of the effect of that over time by drilling Alaska and the North Sea, areas that were known to contain oil but that were not profitable to drill prior to the embargo. But those sorts of fallbacks are all explored and on production (and thus decline) now. What we got left is fracking and the oil sands, both of which are much more expensive per barrel and hated by much of the population, despite their very lives depending on them.

As the amount of energy going into the economy declines, so will economic activity. Dollars and interest rates can’t fix it. Remember, they are real. They are just agreements among men and nations. Agreements that can’t be kept, aren’t.

Pinwheels and solar calculators won’t fix it because they do not work. To make them work would require a pinwheel or an array (or both) on every rooftop, but even once you did that you need batteries. Lots of batteries. A prohibitive amount of batteries. Batteries like we’ve never imagined before. And you have to replace them every 5-7 years.

Nuclear might work, at least that is what I’m hoping, but only the Chinese and Russians seem to be building them these days. It is not possible in North America or Europe.

Thus, the longer term outlook for the economy is pretty grim. The best bet, if you live in North America, is to enjoy the next decade or so because it is probably the last prosperous one. If you are in Europe it may be too late already, as the damaged energy trade routes may never be restored. I’d get the heck out of there if I could. Russia certainly isn’t going to do further business with “the west” until they get all their money back and the sanctions are lifted, and even then they will prefer to do business elsewhere. In short, Europe is screwed starting now. But they won’t be alone for long.

When the trouble starts, now you know why.

#28 Sail Away on 07.28.22 at 6:40 pm

#16 DC on 07.28.22 at 5:26 pm

@Sail Away, why give all your home runs away for free? Surely Warren, Charlie, and every hedge fund manager must be knocking on your door for your great ideas…most of our crystal balls are cracked and cloudy; please tell us where you got yours or at least let us know when the ego bubble pops, this way we can take cover. Lol

——–

I get that a lot.

Consider this small charitable gesture as the least I can do after having been granted such a lifetime of bountiful happiness and prosperity.

Bless up.

#29 the Jaguar on 07.28.22 at 6:59 pm

“Not here on the bridge of this pathetic blog.” GT

Well, from one Starship to another, a reminder. We are about to enter the month of August, also known as the ‘sweet bugger all gets done’ month. I mean nothin’.

But the world still spins on it’s axis. The last Super Moon of the year will occur on August 11th, and the dark forces of the underworld never go on vacation.
While movers and shakers are cooling their jets at the cottage or some other more glam local, sipping a gin & tonic and musing over adjustments to their year end battle plans, others are laying the tracks to take all of us on our next wild fun ride of economic adventure. So don’t unfasten that seat belt just yet kids. The pilot hasn’t turned off the overhead light.

Blinken is trying to get Sergey Lavrov on the telephone. Ring, ring ring. Please pick up the telefono…(Supposedly about releasing and exchanging peeps, but we know who’s calling who, wink wink ). It’s the ‘Cuban Five’ deja vu all over again. Guess we’ll see what else might be discussed. And even the ‘never to be trusted’ New York Times is saying Pelosi’s proposed trip to Taiwan is a dangerous gamble. World events at the moment are just like a cat on a hot tin roof.

There’s this little gem as well : “Royal Bank of Canada has been ordered to divulge the real owners of 97 offshore corporations that used its services”. This might be more fun than Heidi Fleiss’s little “black book”.

Oh me. Nothing to do but enjoy the summer weather here in southern Alberta and await the next Canadian debacle on the calendar. At least there are some things one can always count on.
‘Take us out, Mr. Sulu. Warp Speed.’

#30 Outrage on 07.28.22 at 7:25 pm

Its seems like a controlled collapse. Look what’s happening all over the world. Prepare the best you can. The great reset is still in progress. Good luck everyone.

#31 Dana on 07.28.22 at 7:26 pm

If the Us goes down where is China going to sell all it’s crap. China’s economy and debt binge is already much worse than US.

#32 crowdedelevatorfartz on 07.28.22 at 7:30 pm

@#13 Soren
“If cottagers don’t stay the hell out…is this what will happen to them?”
++
Classic Karma.

@#17 Hubert
Your last name reminds me for the Longest German word.

Donaudampfschiffahrtselektrizitätenhauptbetriebswerkbauunterbeamtengesellschaft
(one word, no hyphen) (die, 79 letters, 80 with the new German spelling that adds one more ‘f’ in …dampfschifffahrts…)

Even the definition is a mouthful: “association of subordinate officials of the head office management of the Danube steamboat electrical services”

And,…of course….its a new way to spell Farht

#33 Victor Llearna on 07.28.22 at 7:34 pm

Maybe little potato Trudeau will find a way to do something extremely stupid and single handedly crash the Canadian Stock market

#34 Ponzius Pilatus on 07.28.22 at 7:59 pm

#136 DON on 07.28.22 at 4:31 pm
#132 Shawn on 07.28.22 at 3:23 pm
To unbalanced

Clansman motel and restaurant North Sydney. Worth a drive. Home style cooking. And take a walk around the grounds ask about the walking trail in the little woods made mostly by hand by a 90 year old. See the pool area. Older place but well maintained.

********

I will pass this on to my friend who just moved and retired there. She likes home cooked meals.

Cheers!
————–
Me too likes home cooked meals.
As long as they are cooked in a home.
In a Restaurant not so sure.
Do they cook them at home and than drive them to the restaurant?
I’m a picky eater.

#35 Sail Away on 07.28.22 at 8:16 pm

#29 the Jaguar on 07.28.22 at 6:59 pm

Blinken is trying to get Sergey Lavrov on the telephone. Ring, ring ring. Please pick up the telefono…(Supposedly about releasing and exchanging peeps, but we know who’s calling who, wink wink ).

———

Haha, yes, exchanging for Brittney Griner who the US has deemed ‘wrongfully detained’, because apparently, bringing illegal narcotics into a country and being duly arrestested and detained while awaiting trial for, you know, breaking the law, is now a wrongful thing for that country to do?

Weird. Didn’t the US just catch and detain a Canadian arms smuggler because he broke the law? Let’s go with the ‘rule of flexible law, depending who you are’.

#36 I'm a Dork, I Know But... on 07.28.22 at 8:17 pm

Besides brain cells and wisdom teeth, what am I missing?

Logic. No ‘huge job losses’ are likely when companies are still making bank. Use your noggin. – Garth

__________________________________________

You missed the missing brain cells part. Affects the noggin and logic don’t ya know.

Again, huge job losses if we have 4 or more negative growth quarters according to some prominent “analysts” (they suck I know).

But,if that happens…

There won’t be a lot of bank makin’, but a lot of doobie rollin’, while you’re livin’ in a van down by the river.

Matt Foley 1992

#37 crowdedelevatorfartz on 07.28.22 at 8:31 pm

@#34 Ponzies Puns
“Me too likes home cooked meals.
As long as they are cooked in a home.
In a Restaurant not so sure.
Do they cook them at home and than drive them to the restaurant?
I’m a picky eater.”
+++
A picky eater?
Perhaps.
A comedian?
Never.

#38 Elon Fanboy on 07.28.22 at 8:31 pm

And Wikipedia just changed the definition of a Recession to specifically mention the US and locked the page. 57 edits in the last 3 days, lol.

https://en.m.wikipedia.org/wiki/Recession

#39 Ponzius Pilatus on 07.28.22 at 8:40 pm

Shawn,
Further more to the “home cooking Clansmen” Restaurant.
Do they have a dress code?
I don’t mean “jacket and tie”.

#40 AK on 07.28.22 at 8:42 pm

“So have markets formed a bottom?”
===============================

Yes, June 17, 2022 was the bottom.

#41 Raw Nines on 07.28.22 at 9:03 pm

The biggest thing we have to worry about is the breakdown in healthcare as that massive number of alcoholic, smoking and obese boomers overwhelm the system. That is predictable.

Where the economy is going/the value of stocks and bonds/inflation? No one knows. Just go back over business articles for the past few years to see how wrong pundits get it.

#42 Ponzius Pilatus on 07.28.22 at 9:31 pm

#32 crowdedelevatorfartz on 07.28.22 at 7:30 pm
@#13 Soren
“If cottagers don’t stay the hell out…is this what will happen to them?”
++
Classic Karma.

@#17 Hubert
Your last name reminds me for the Longest German word.

Donaudampfschiffahrtselektrizitätenhauptbetriebswerkbauunterbeamtengesellschaft
(one word, no hyphen) (die, 79 letters, 80 with the new German spelling that adds one more ‘f’ in …dampfschifffahrts…)

Even the definition is a mouthful: “association of subordinate officials of the head office management of the Danube steamboat electrical services”

And,…of course….its a new way to spell Farht
—————
Fart in German is Furz.

#43 crowdedelevatorfartz on 07.28.22 at 9:31 pm

@#36 Dork
“There won’t be a lot of bank makin’, but a lot of doobie rollin’, while you’re livin’ in a van down by the river.

Matt Foley 1992”

+++
One of the more amusing SNL skits with Chris Farley.
Watching the other actors trying not to laugh was classic SNL.

https://www.youtube.com/watch?v=Xv2VIEY9-A8

#44 Nothing to see here, folks on 07.28.22 at 10:02 pm

DELETED (Anti-vaccine)

#45 meslippery on 07.28.22 at 10:49 pm

#41Raw Nines on 07.28.22 at 9:03 pm

The biggest thing we have to worry about is the breakdown in healthcare as that massive number of alcoholic, smoking and obese boomers overwhelm the system. That is predictable.

Where the economy is going/the value of stocks and bonds/inflation? No one knows. Just go back over business articles for the past few years to see how wrong pundits get it.
————
What I don’t understand is for years we have been told
that smoking tobacco cause’s ever heath problem ever.
Now that smoking rates have been reduced bigly I would have thought that half our hospitals could close due to a lack of sick people.

#46 Stephladimir Harputin on 07.28.22 at 10:51 pm

I support Pierre.

Maybe if you were more of an obedient puppy, I would have supported you too as well, Turner.

That’s why I am a cat lover. And a winner.

And you have a blog full of deplorables.

#47 the Jaguar on 07.28.22 at 11:19 pm

@#35 Sail Away on 07.28.22 at 8:16 pm.

Agreed. Hubris, and goes back to “for thee but not for me’. More examples of this than one can list. The other party involved is another fine example, but in no way could ‘youthful exuberance’ be applied as a defense.

If we ever meet up in in another life I can tell you a story.
For some of us ‘world’s colliding’ is a force gaining ground on us every moment as we flee in exhaustion. Destiny. Serendipity. Who knows?

Not sure what I did in a previous life to earn this, but escape seems to be an illusion. I need to lie down and rest just thinking about it..

#48 Karlhungus on 07.28.22 at 11:25 pm

Dam if this was the bottom I timed my VEQT almost perfectly. Time will telll I guess but when something is 20% you buy !

#49 Tony on 07.28.22 at 11:40 pm

Re: #19 Crystal ball futurist on 07.28.22 at 5:35 pm

Wages have to catch up to the inflation rate for earnings to go higher but the real inflation rate is much higher than the stated inflation rate.

#50 crowdedelevatorfartz on 07.28.22 at 11:44 pm

@#42 Ponzie Punz
“And,…of course….its a new way to spell Farht
—————
Fart in German is Furz.

++++
Zee lack of humour in Ponzie’s smallest toenail iss evident.

https://www.youtube.com/watch?v=lT2FJLhVRUg

Or so the Germans would have us believe…..

#51 T-Rev on 07.29.22 at 12:03 am

As I’ve stated here several times over the last few months, no one has a crystal ball, especially not me. However, as also stated, the economy is much more rate sensitive than in times past, due to the extreme leverage and valuations that have built up in the housing market. When 8% fixed rates were talked about, i stated I thought there was no way they’d climb over 6-7%, and that they’d probably fall shortly after as demand destruction occurred and inflation receded quickly at those yields and investors saw value in bonds. Then more recently, as five year yields plopped (now off a point from the recent mid June highs), I predicted a convergence in fixed and variable rates as short term money was priced higher along with CB rates, but longer term money (5yr) looked more attractive to bond investors as they see inflation being tamed- if you can get government debt at 3.5pct yield (like in mid June), and you know that inflation will come back within target in a year or two, you’re going to get moist with the potential of both dividend yield of those bond funds plus capital gains upside as inflation quells and prices surge. It all happened a bit faster than predicted, and there’s likely some volatility yet to weather, but since I’m on a roll over the previous couple months, let me say this: The doom and gloom is already overdone. The Ukraine war will end, energy investment globally will ramp up, governments will be investing heavily in energy security even post-war which Canada and the US will benefit from, inflation is going to be corralled, and the excess Covid liquidity in the system will be flushed out via higher CB rates over the next year. Rates will remain somewhat elevated (I don’t see a drop in CB rates before mid-2024 when inflation falls below 3pct), but longer term (5yr+) government debt will trade in the current 2.5%-4% Range putting fixed mortgage rates at 4-5.75% depending on a few factors. This will kill speculative demand and excess liquidity stupidity, with major hurt in Bunnypatch, the Okanagan, moderate pain in Vancouver, Victoria, Toronto proper, Ottawa, Montreal, and Halifax et all, and short-lived fear induced pain everywhere else. So half the country is in for some moderate to serious pain. The other half will barely feel this a year from now. But the financialization of housing in the country’s hottest markets may come to an end for a looong time, because we could be a decade before meaningful recovery in those markets that blew off orgiastically during the perfect storm of Covid. If I’m right and fixed money does cap at 5%, we might all be surprised at how little effect this has outside the bunnypatch/Okanagan markets.

#52 Valleyboy on 07.29.22 at 12:15 am

Ugh. It’s all about the Non government getting more than they pay. Or Government spending to prevent recessions. It’s that simple. Any politician that says he wants to reduce the deficit is essentially saying he wants you to pay more tax.

#53 Jennifer on 07.29.22 at 12:26 am

Sorry Garth, but your ” no hard landing” is old movie.

We have been there before, may I remind you, debt and higher interest rates ALWAYS ends in recession.

Slowing economy just started. By next year, there WILL be recession. But, that’s only my point of view.

We shall compare results next year.

I would like to have a vote on those who believe in a serious recession, and those who do not.

#54 Gamer on 07.29.22 at 12:44 am

Fed recession indicators disaster announcement mitigated by Democrats need to prop up Biden’s mid-term outcome. That would have been a better headline. Typical of the left, any dishonesty in the name of political sleaze is a lie well told.

For 300 years the definition of a recession is two quarters of negative growth. Everyone knows that. But that’s politically inconvenient, so it has to change to fit the narrative. Now we’re being told this will be a postcard recession, perfect, no pain, transitory. No explanation as to how we get faultlessly from 10% ++ inflation down to 2?

“There will be blood”. Expect media to massage the bullet point memos of failing aspirations and a banshee wailing about everything else to keep the focus of the current worsening recession until after the mid-terms. Do you think Nancy Pelosi is flying to Taiwan because she likes airline food!!

It’s a huge distraction. The Democrats would rather got to DEFCON 1 than have headlines exposing economic incompetence in these last 100 days before a potential wipe out in midterm results. I wish we had smellivision folks, because this fairy fart “soft landing” BS is pure politically driven plunge protection stench.

#55 DJT on 07.29.22 at 1:56 am

#12 Love_The_Cottage on 07.28.22 at 4:51 pm
#1 DJT on 07.28.22 at 4:15 pm
The first step in solving The Recession Problem is admitting it exists. Something the Liberals & Democrats refuse to do.
________________
Ok, let’s say you’re right. What’s the next step? What does the Gov’t of Canada do to avoid a recession in the current environment when there is a recession starting in the U.S. and Europe at the same time? Be specific, we look forward to your further insight.
______________

The WEF Liberals need to abandon their blockades on affordable Alberta Energy, ditto for WEF Democrats, American has the world largest oil reserves.

#56 Jane24 on 07.29.22 at 1:59 am

Well I am in Denmark right now and energy inflation and scarcity are very front of mind. German energy use cuts are the top news. I don’t see how inflation can go down when German factories are planning production cuts, turning off hot water and air con/heating nationally. It is going to be a tough winter. Sell any euros.

Papers say that my heating bill in England will go from £120 a month to £300 to £500. That will be highly inflationary. I am lucky as I can pay but many won’t. this inflation cycle has just started.

#57 Bileth on 07.29.22 at 4:03 am

#10 – I wonder what that lower return on 5 year bonds will do to rate reset preferreds. Can they go lower still?

CPD has laid an egg despite rising rates. What gives?

#58 Tim on 07.29.22 at 7:51 am

We don’t put money in anything we don’t understand and ew can’t sleep at night. The only thing we could do the last 30 years is put my money in GICs, term deposits, savings accounts, savings bonds. We did what we needed, reduce and eliminate, stay out of debt, pay down our mortgage in 12 years, own a modest house no more than 25% of our total assets, retire with dignity and just live off 20% of our interest, and CPP, OAS.

#59 Summertime on 07.29.22 at 8:11 am

So the plan apparently is for the rates to go 3.4 % this year, then to 3.8 and then stop the increase.

Apparently that will help fighting accelerating inflation of over 9 %, real inflation of necessities – energy, rent, food – 20 %.

When inflation was equivalent or lower (using comparable methodologies) 40 years ago, rates were in double digits.

It seems now the focus is on ‘soft landing’ which practically makes fighting inflation impossible.

So read between the lines and prepare for after the eye of the storm when the thingy/inflation really hits the fan.

IHMO the coming cumulative inflation will render the standard of living to bellow the ‘misery’ level, pretty much bare survival for quite some time.

#60 Dharma Bum on 07.29.22 at 8:28 am

So, in the flogging a dead horse department…..
I’m not really a GIC thumper. I realize the interest is fully taxable. That’s why I specifically mentioned their place in registered accounts (RRSP, TFSA, etc.) where the taxation is non existent. Only as a small hedge against volatility, and in light of the fact that the dividend income on a lot of ETFs are pretty low compared to the risk free rate these days. It’s not as if the current returns on a lot of dividend producing income instruments are really holding the line against inflation. I get it that a 1% or 2% GIC last year was useless. But a short term 4.5% GIC as part of the overall mix of the income producing side of a tax free portfolio right now is not really a drag. Compared to 3%-4% divvies on a lot of ETFs with falling values, it provides some offset. Li’l bit.
Dividends need to increase. The spread must be larger.

#61 Dharma Bum on 07.29.22 at 8:48 am

#53 Jennifer

I would like to have a vote on those who believe in a serious recession, and those who do not.
———————————————————————————————————

As soon as the word “believe” is introduced, the subject matter is usually one of unprovable fantasy.

Like:

Unicorns
Religions
Magic
Ghosts
Angels
Demons
Reincarnation
Flat Earth
Conspiracies
Fairies
Leprechauns
Astrology
Gender fluidity

Yes, there are many people who believe in these things, but they are whacked out of their skulls.

The imminent onset of a recession – or not – will be a factor of a complex series of intertwining economic events and society’s corresponding response to them.

It’s not a matter of “believing”.

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

#62 Shawn on 07.29.22 at 8:59 am

Tim retires well

#58 Tim on 07.29.22 at 7:51 am

We don’t put money in anything we don’t understand and ew can’t sleep at night. The only thing we could do the last 30 years is put my money in GICs, term deposits, savings accounts, savings bonds. We did what we needed, reduce and eliminate, stay out of debt, pay down our mortgage in 12 years, own a modest house no more than 25% of our total assets, retire with dignity and just live off 20% of our interest, and CPP, OAS.

******************************
Tim you have done well. Don’t let anyone tell you different much less insult your approach. “You did it your way!”

#63 Bezengy on 07.29.22 at 9:02 am

What’s up with Poilievre refusing to participate in the upcoming debate? Sounds like something an entitled arrogant snob would do. I hope those attending make a mockery of his absence. What a weasel.

#64 crowdedelevatorfartz on 07.29.22 at 9:05 am

@#56 Jane24
“this inflation cycle has just started.”
++++
What is happening in Europe has me thinking we are sleep walking into a world war.
Fuel rationing, inflation, food shortages….
Putin, China,
What a waste.

#65 Philco on 07.29.22 at 9:48 am

Garth that is good news for all.
I’d be buying stocks but busy building.
Housing will be fine depending on the location.
My house worth about 1.2m and it cost that to build.
Large beautiful land right in town ocean view.
They were not bid to nose bleed levels here. Most peeps have ocean views overlooking the islands with the best sunsets. People coming to retire here in a big way. It’s still affordable in the bubble. New houses with views 700 800k. As for the nose bleed teardown 50s special in the cities..like some tech stocks will never see those highs for a decade or 3. What were people thinking!?

#66 inflation is rampant on 07.29.22 at 10:30 am

Jay Powell guaranteed $140+ crude now. probably higher. that’s what you get when you have incompetent central bankers.

it’s either the economy or inflation, but he can’t manage both.

the economy needs to go into a hard landing to bring down inflation. if not, inflation stays high and goes higher.

oh.. wait..

that’s the plan all along. print trillions. inflate out of debt. got it. stagflation.

#67 Balmuto on 07.29.22 at 10:51 am

#51 T-Rev on 07.29.22 at 12:03 am

You never realize how important paragraphs are for reading comprehension until someone doesn’t use them.

#68 DON on 07.29.22 at 10:52 am

#65 Philco on 07.29.22 at 9:48 am
Garth that is good news for all.
I’d be buying stocks but busy building.
Housing will be fine depending on the location.
My house worth about 1.2m and it cost that to build.
Large beautiful land right in town ocean view.
They were not bid to nose bleed levels here. Most peeps have ocean views overlooking the islands with the best sunsets. People coming to retire here in a big way. It’s still affordable in the bubble. New houses with views 700 800k. As for the nose bleed teardown 50s special in the cities..like some tech stocks will never see those highs for a decade or 3. What were people thinking!?

*******

Sounds like recency thinking.

#69 TurnerNation on 07.29.22 at 11:04 am

75th? Slow day.

ZOMG, F was ahead of his time!

Our rulers taking back to the Stone Ages or 3rd world country status. For the “Climate”.
We will be squatting in the fetid dirt streets shovelling gruel into our pie holes by hand. Anyone know how to dig a latrine?

https://www.westernstandard.news/news/drop-the-plastic-forks-and-eat-with-your-hands-environment-minister-tells-canadians/article_3d717b78-0f37-11ed-900e-8bc2daec97d6.html
“Environment Minister Steven Guilbeault’s department recommends Canadians eat with their hands to comply with a federal ban on single-use plastic forks. Food trucks should also ask customers to bring their own containers instead of using takeout polystyrene boxes, the department said.
“Businesses should consider giving the customers the option to specify whether they require single use cutlery at all,” staff wrote in a report. “Businesses could also consider providing more meal options that do not require the use of cutlery, e.g. wraps and sandwiches.”
According to Blacklock’s Reporter, federal enforcement of the regulations are scheduled by 2024. The rules ban six everyday plastic products: single-use cutlery, stir sticks, straws, polystyrene food containers, six-pack rings, and checkout bags.”

#70 crowdedelevatorfartz on 07.29.22 at 11:15 am

The City of Vancouver Fire Chief is forced to declare the blocks and blocks and blocks of homeless encampments on Vancouvers Downtown east side …must go.

https://vancouver.citynews.ca/video/2022/07/26/vancouver-fire-chief-orders-take-down-of-tents-on-east-hastings/

The invisible Mayor Stewart ( highly educated, former NDP MP for Burnaby, political science PhD and author Kennedy Stewart) has no views on this subject.
Mere months away from a civic election.
He is silent except when opining that the Vancouver Police are systemically racist and should be defunded.
So
No love between the VPD and the Mayors office.
The police searches over the past week have found over 20 – 20lb propane tanks in various locations where homeless have set up camp on the sidewalks in front of stores, businesses and hotels.
“A disaster waiting to happen”, said the Fire Chief.

And yet 10 blocks away the City will spend at least 1 million dollars promoting, policing and cleaning up after the annual Pride Parade.

Priorities, priorities.

#71 Doug t on 07.29.22 at 11:16 am

#64 fartz

Yup – been feeling that way as well – everything just seems to be mounting and I’m worried the world is in a self-fulfilling prophecy mode

#72 jess on 07.29.22 at 11:22 am

resource curse ?

since when does Sudan export cookies?

The evidence also suggests that Russia has colluded with Sudan’s beleaguered military leadership, enabling billions of dollars in gold to bypass the Sudanese state and to deprive the poverty-stricken country of hundreds of millions in state revenue.

In exchange, Russia has lent powerful political and military backing to Sudan’s increasingly unpopular military leadership as it violently quashes the country’s pro-democracy movement. (cnn)

https://www.globalwitness.org/search/?search_query=sudan&order=relevance&tab=pages&tab=pages
due diligence ?
https://www.globalwitness.org/en/campaigns/conflict-minerals/beneath-shine-tale-two-gold-refiners/

Facebook unable to detect hate speech weeks away from tight Kenyan election
Despite the risk of violence around the upcoming Kenyan election, our new investigation finds Facebook failed to detect hate speech ads in Swahili and English

#73 Calgary Observer on 07.29.22 at 11:35 am

Price drops continuing in Calgary. $30K – $40K every 10 days to two weeks.

Big drops of $100K – $125K are now setting the prices on the margins.

Estate sales are the biggest droppers in the older neighborhoods as the heirs don’t care; they just want the $$ before market drops more.

Comparables getting dragged down now.

#74 Pbrasseur on 07.29.22 at 12:03 pm

Canada is a welfare state utopia living of a debt driven Ponzi scheme, what could possibly go wrong when you know both utopias and Ponzi schemes always end badly.

Sure the next recession could be shallow and mild, as long as confidence remains, but sooner or later (and I would bet on sooner) reality will prevail and we get a doozy!

#75 THE DANDADA on 07.29.22 at 12:10 pm

Back at 100 DOLLAR OIL.

Interest rates gutting the middle class.

But if your lucky enough to have fallen in the 1% I guess your biased and see things differently.

#76 Stupidity, corruption and cretinism is the definition of Canadian government on 07.29.22 at 12:15 pm

https://www.westernstandard.news/news/drop-the-plastic-forks-and-eat-with-your-hands-environment-minister-tells-canadians/article_3d717b78-0f37-11ed-900e-8bc2daec97d6.html

#77 jess on 07.29.22 at 12:35 pm

who composed the roadmap (money trail)?

https://wallstreetonparade.com/2022/07/meet-marc-short-the-former-koch-exec-who-has-now-testified-before-a-grand-jury-investigating-the-january-6-attack/

‘nonprofit” groups that fomented the Big Lie
who were they?

,,” i360, has a massive voter database
includes phone numbers of people likely to turn out for an event of this nature. Its program, Predictive Dialer, says it can “scale call volume quickly so you aren’t let down as you ramp up your campaigns, from hundreds of outbound calls per hour to more than 100,000.” The Congressional Committees that are investigating the attack at the Capitol need to ascertain if Koch’s i360 services were used to make robo calls for the event.”

reported by Jamie Corey at the watchdog group, Documented, the dark money arm of RAGA made robo calls to boost turnout for the January 6 event at the Capitol. The message was as follows:

“I’m calling for the Rule of Law Defense Fund with an important message. The ‘March to Save America’ is tomorrow in Washington D.C. at the Ellipse in President’s Park between E St. and Constitution Avenue on the south side of the White House, with doors opening at 7:00 a.m. At 1:00 p.m., we will march to the Capitol building and call on congress to stop the steal. We are hoping patriots like you will join us to continue to fight to protect the integrity of our elections. For more information, visit MarchtoSaveAmerica.com. This call is paid for and authorized by the Rule of Law Defense Fund, 202-796-5838.”

Another of the Coalition Partners, Turning Point Action, Tweeted that it was “honored to help make this happen, sending 80+ buses full of patriots to DC to fight for this president.” The Tweet was first reported by DailyDot.com.

Turning Point Action is a dark money group that does not report its donors to the Federal Election Commission. However, according to the Center for Media and Democracy, its sister group, Turning Point USA, has received $610,000 from Donors Trust since 2017. (We should note that the IRS has not posted the 990 tax filings as yet for Donors Trust’s tax years of 2019 and 2020 so it is quite possible that the cash haul is far greater than $610,000.)
============

Freedom Partners was organized as a 501(c)(6) tax exempt organization.

Mike Pence and Marc Short established
Advancing American Freedom. It was launched on April 7, 2021.-

https://wallstreetonparade.com/supreme-seduction-bringing-low-the-high-court/

#78 Ponzius Pilatus on 07.29.22 at 1:00 pm

#70 Furz
And yet 10 blocks away the City will spend at least 1 million dollars promoting, policing and cleaning up after the annual Pride Parade.

Priorities, priorities.
——————————
The Pride Parade brings thousands of visitors to Vancouver who spent good money at local businesses.
And promotes Vancouver as a safe and tolerant place for gay and lesbian travellers.
I guess you have no issues with staging the Fireworks Festival.

#79 Tony on 07.29.22 at 1:13 pm

Re: #75 THE DANDADA on 07.29.22 at 12:10 pm

So much for the fake recession. The traders think otherwise.

#80 Tony on 07.29.22 at 1:27 pm

Re: #53 Jennifer on 07.29.22 at 12:26 am

I don’t even believe there was any recession in America. Going forward GDP will increase not decrease. I’m watching oil go nothing but higher since Powell’s speech. Some recession the balance sheet in America seems to be increasing instead of decreasing.

#81 Shawn on 07.29.22 at 1:37 pm

Move to Alberta?

Oil is back above $100 United States dollars and someone above claims home prices in Calgary are dropping. and they were already affordable.

Enough said?

#82 chalkie on 07.29.22 at 1:43 pm

For the new want bee beginner Real Estate agents, who was going to get rich fast, “will the boat has sailed” and you have missed it, you can stick around for another 25 years and hope that it docks again, but rest assured you can make a lot more money by taxi driving by the time the next downturn arrives. For the real estate agents who are well established and have seen a few downturns, then you know the game, you have tucked some money away, because you knew there are darker days ahead over those beautiful sunsets, while the not so established, now have to front the money for their image in playing their short-lived agent part in their newly purchased Mercedes, Land Rovers and infinities unfortunately. Your chances of getting rich for your part of the ridiculous 5 percent commission, with little to no investment is gone by the wayside, keep your hopes up, there is always Lotto Max and its here to stay.

#83 inflation is rampant on 07.29.22 at 1:47 pm

#80 Tony on 07.29.22 at 1:27 pm

Re: #53 Jennifer on 07.29.22 at 12:26 am

I don’t even believe there was any recession in America. Going forward GDP will increase not decrease. I’m watching oil go nothing but higher since Powell’s speech. Some recession the balance sheet in America seems to be increasing instead of decreasing.
_____________________________________

REAL GDP was negative. that’s because the economy could NOT grow FASTER than INFLATION.

so, REAL GDP went DOWN. Nominal GDP was UP. Q3 will also likely be NEGATIVE. Q3 is slowing down, but CPI will remain high.

never in history have we had 2 consecutive quarters of NEGATIVE GDP that was NOT called a RECESSION.

the balance sheet of America is DECLINING because of INFLATION.

the more money they print, the richer you think you are, but you’re not. you can’t keep up with inflation.

that’s because inflation is rampant.

just like a balanced portfolio. -15% this year, but really, it’s -23% after inflation.

unless you’re +8% … you haven’t broken even with inflation.

it’s criminal, but central banks will do this for years now. to inflate away debt. they don’t have the stomach for doing the right thing.

#84 WTF on 07.29.22 at 2:03 pm

#78 PP “The Pride Parade brings thousands of visitors to Vancouver who spent good money at local businesses.”
—————————————————————–
While the celebration is, overall, a good thing for many reasons the actual attendance has been ginned up by organizers to glean more advert revenue and reduced policing costs from the city.

The actual attendance is considerably lower than the organizers claim.

Claim 650k, actual? about 100k spectators (which has been consistent over several years according to independent unbiased observation) This according to a Gay friendly publication.

https://xtramagazine.com/power/vancouver-pride-parade-attendance-greatly-exaggerated-68951

The Fireworks typically have 400k Viewers nightly, x 3 nights

https://en.wikipedia.org/wiki/Celebration_of_Light#:~:text=The%20celebration%20is%20one%20of%20Vancouver%27s,annual%20attendance%20of%201.4%20million%20people.&text=The%20celebration%20is%20one,of%201.4%20million%20people.&text=is%20one%20of%20Vancouver%27s,annual%20attendance%20of%201.4

Lies damn lies and statistics.

#85 crowdedelevatorfartz on 07.29.22 at 3:01 pm

@#78 Ponzies Payola
“The Pride Parade brings thousands of visitors to Vancouver who spent good money at local businesses.”
+++
As opposed to the millions of dollars spent shuffling homeless from Park to Park to sidewalk back to Park?

https://bc.ctvnews.ca/staff-remove-tents-other-shelters-from-encampment-in-downtown-vancouver-park-1.5578955

https://vancouversun.com/news/local-news/vancouvers-strathcona-park-site-of-former-homeless-camp-reopens-to-public

#86 Gr on 07.29.22 at 3:16 pm

Hi #69 TurnerNation,

If you like to eat and not go brock paying for the food,
This farmer has something to say and good ideas about

-The Canadian Fertilizer Ban YouTube 13min.
https://www.youtube.com/watch?v=LMG4kuEN_kM

And have you heard about this to help deliver stuff

-Switzerland Moves Ahead With Underground Autonomous Cargo Delivery After half a decade of study, Cargo Sous Terrain is ready to start on its first tunnel
https://spectrum.ieee.org/cargo-sous-terrain

#87 Paul on 07.29.22 at 7:21 pm

Shawn and Tim, I want to say there are many out there more than you think that are debt free, own a house, just GICs, term deposits are millionaires and do not need a reverse mortgage and have decades of income to live off and actually add t their money.

#88 Greg on 07.29.22 at 11:42 pm

So nice to see the Doom and Gloomers go back in the closet and hide. The market upticked last FED meeting announcement too, but then sold off a few days later for new lows.

However this time big companies put out decent ER’s combined with Powell’s more optimistic comments. Plus the FED’s REPO got over $2 trillion in their pocket today!
Bullish vibes at least until election time.