Bring it on

As we all watch rates go nuts, Putin lose his marbles and financial markets wobble there are two investment choices. Do nothing (not a bad strategy). Or be bold (scary but probably wise).

Stock markets have dipped 10% below the high they made in August, which was lower than the record hit a few months earlier. We know why this is happening. Inflation, yes. War in Europe, sure. Supply chain woes, of course. Interest rates, mostly. Central banks are not finished hammering us yet as the Fed proved today. There might be a recession and so Mr. Market is taking risk off the table in advance.

This terrifies most people who think ‘long-term’ means next week. But for those who understand that buying when things are cheap yields long-term bliss, this is interesting. Especially when you can do it with loaned money. With tax-deductible interest. At a rate that’s almost free. And via a less-taxed spouse. What’s not to love?

However, you have but seven business days to make the most of the opportunity.

Here’s the deal. In order to take advantage of this you need (a) available cash and (b) a squeeze. This works best for those in a higher marginal tax bracket than their mate.

The rules allow you to loan money (as much as you want) to your spouse to invest. All the gains made will remain the property of that person and not be attributed back to you for tax purposes. This is unlike a gift of money, in which case the loving donor is whacked. But in order for this spousal loan to be legit, interest must be paid by the borrowing spouse and reported as income by the lender. The payment has to be made annually, the agreement must be documented and the funds kept segregated (not in a joint account, in other words).

Here’s the great part: the loan rate allowed by the CRA is just 2%. In a world where inflation is (at least) 7%, this is free money. But that rate rises at the end of the month by 1%, with more hikes likely after that.

More good news: the 2% interest, besides being puny, is also tax-deductible to the borrower. It doesn’t get much better than that. And if the money is deployed at a time of economic uncertainty, risk aversion, jittery markets and central bank terrorism, you’re pretty much assured of a good outcome in the years to come.

How can you make this work?

Easy. Just be careful. First, have a promissory note drawn up between spouses (best done by a lawyer) setting up a demand loan at the proscribed rate of interest, payable annually. Second, the receiving spouse opens a non-registered investment account into which the money is dumped. Third, make sure the interest is actually paid on time and is documented. Fourth, the borrowing spouse can claim all the interest as a deductible expense and the lender records it as taxable income. Fifth, so long as the loan is not called (or demanded) by the lending spouse, the initial interest rate attached to it (2%) lasts forever.

A spousal loan is not a new strategy. But rarely has it been so cheap to arrange, nor worth considering at a more opportune time. When the prime rate is 5.45% at the banks (on its way to 6.2%), with consumer loans pushing 8%, being able to borrow at a lowly two points is a gift – made all the more appealing as the interest can be written off.

Why would you not do this?

You tell me.

$      $      $

The Fed has spoken.

The US central bank stays a hawk. Rates rise 75 basis points with lots more to come. Wall Street seems convinced the CB aggression will usher in a recession. BMO’s big market strategist just said this is a “99.9%” certainty. Recessions strike deepest at employment, but we should be prepared for market volatility in the days ahead.

After all, it’s but six weeks to the US midterm elections, setting the scene for Trump vs the World in 2024. Putin is out of control, calling up 300,000 recruits for the Ukrainian war and threatening to nuke Europe. Crypto is collapsing. Energy is tenuous, the supply chain is still wonky and the cost of living is crushing. Lots to fret about globally. Go home and hug your dog.

Of course, we’ll get through it. The Fed and our guys want inflation under control pronto. Central banks always win. Putin’s losing his war and Russia’s being besmirched. The West and Zelensky will triumph, one way or another. The economy will pause, retrench a little as excess is blown off, then advance. Next year your daughter will even have a better chance to buy a condo.

It’s still a good time to be alive. A great time to buy stuff. Make that loan.

About the picture: “This is Ollie, our Covid Canine,” writes Bryan.  “We are8 months in and no regrets.  He brings us love & joy every day and was certainly the best thing to happen to our family during this crazy time in history. Thanks for all your advice Garth.”

128 comments ↓

#1 Linda on 09.21.22 at 2:39 pm

‘Ollie’ almost looks too good to be real:)

Given that the Fed is continuing to raise rates to fight inflation, seems fair to state the BoC will also continue to raise rates, if for no other reason than to prevent the exchange rate from continuing to slide further into the red as it were. Plus we still have inflation concerns here. The official numbers may or may not reflect reality, but regardless the fact remains that said numbers are way above the BoC target range so action on the rate increase front is called for.

#2 Søren Angst on 09.21.22 at 2:44 pm

For the curious, excepting the US Fed rate hike number (+0.75%), you can 100% predict what Powell will say. See Table 1, released 30 min before his speech:

https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20220921.pdf

4.4% by year end.
4.6% in 2023
3.9% in 2024
2.9% in 2025

Visually scan across that row for the range for the above.

—————–

“Rates rise 75 basis points with lots more to come.”

Lots more My Liege, indeed.

#3 Faron on 09.21.22 at 2:45 pm

Based on what I’ve learned in A.P.’s “Putin’s Russia”, life in Russia’s military is the worst kind of hell. The desertions and surrenders and emaciated soldiers and general blundering are apparently standard. Not to mention rampant war crimes.

#4 Basil Exposition on 09.21.22 at 2:46 pm

If you invest the spousal loan and wait a bit, perhaps it can help you buy that dream cottage in the near future at a discount.

Has anyone else noticed the recent explosion of real estate listings in the cottage country north of Toronto?
One of our favorite HGTV shows involves an attractive man named Scott (of course) who renovates cottages accompanied by a hot blond designer wearing impossibly skinny jeans. They turn run down (rustic in real estate speak) properties into stunning vacation homes which the owners can then rent out to vacationers. The part at the end where Scott explains the rental income math to the owners never made sense to me. I had no idea that a rental on Deer Fly Lake in the Kawarthas could command similar money to an all-inclusive resort in the Caribbean. Never mind that the owners don’t get to use their cottage during the best months of the year if they want to maximize their investment. Now that covid has largely past and the hated Arrive Can app is going away, margaritas served to me on a beach overlooking warm turquoise blue waters seem like a better option than BYOB at Deer Fly Lake with its seventy-degree water temp. Owning Cottage country must be getting too expensive for many recent buyers.

A cottage is not an income-producing asset so there is no interest deductibility. – Garth

#5 Søren Angst on 09.21.22 at 2:50 pm

Also, US Fed more pessimistic than June for their GDP.

Again, compare “Change in real GDP” for today vs. June. Much lower. *

They show 1.2% in 2023 but the range tells a different story:

-0.3–1.9%

[-‘ve sign not a typo]

June projection was:

0.8–2.5%

FOMC divided as to where their economy will go in 2023 it seems to me.

* Table 1
https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20220921.pdf

#6 Caffeine Monkey on 09.21.22 at 2:56 pm

S&P500 and TSX shot up after the Fed announcement. The market seems to be soothed that the expected rate increase was 0.75% as expected.

#7 The Great Rug Pull on 09.21.22 at 2:56 pm

“Our message to Canadians is that interest rates are very low and they’re going to be there for a long time” 

– Tiff Macklem, July 2020

Millions of Canadians who acted based on that lie are now ruined or soon will be.

ABOLISH THE BOC

#8 ElGatoNeroYVR on 09.21.22 at 2:58 pm

Number one reason for relatiosnhip breakdown is money , either disagreements on where to spend or not enough of it.
Lending money to the spouse is a recipe for disaster , especially if the porfolio goes down.
There are enough challenges in any relatiosnhip , especially if it is someone’s second or third kick at the can that you do not want to introduce a silent bomb.
As a bonus think of the potential consequences in a second or third mariage if one spouse passes .Any document , no matter how ironclad the lawyer makes it will be challenged; all logic goes out the window as grieving people are not rational.Sadly I’ve had front row seats.
So to recap , introduce another money related reason to argue about during the marriage and a huge bone of contention at expiry or breakdown time. All to save a measly few(defined as under 20) grand in taxes.
May all be blessed with a harmonious marriage and never ever lend money to your spouse ,for any reason; for all we know is the present , future is difficult, nrxt to impossible to forecast.

#9 Captain Uppa on 09.21.22 at 3:05 pm

Garth, which sectors of companies do you think will be laying off the hardest and those the least?

#10 chalkie on 09.21.22 at 3:06 pm

Will there it is folks, 75 basis points as projected for the US Fed’s. Canada, we will get our taste of medicine next month.
Credit cards are very closely linked to the Fed’s actions, with the average American carrying a credit card debt of almost $9000.00, this is staggering for interest on an annual basis. Currently the average credit card rate is 18.1% with higher interest being tacked on again today, we can expect over 19%, the credit card companies have to make a profit on every move, or “so they say”. I was surprised to see that Americans carry such an average balance on their credit cards, its best to be a free loader and pay on time, if you can’t afford it, don’t charge it. Some people can’t control credit cards, its buy, buy and buy, when you don’t see the green backs being spent, you don’t feel the pain. Best advise that I could offer here for people who can’t control credit cards is to cut them up and pay everything in cash, once you see those 20- and 50-dollar bills on the counter, it will ring an alarm bell and you will spend much less, learn to understand the difference between want and need, “easier said than done” for a lot of people.

Interest rates is affecting big ticket items already, it very noticeable, like homes, Cars, Furniture and appliances, more so based on a person’s credit history, usually the hidden cost is always baked into the rate. These are many products manufactures already feeling the effects of a slow down in the making. With 21% of people now having to rely on credit cards to get by, this is more bad news for them.

A recession is looming and unfortunately its always the low-income families that suffer the most in these downturns. My projections are, this recession will set in by early next year (2023) and the WFH will dry up like a prune on a hot day as jobs disappear. Currently employees have the upper hand in saying how the companies are run due to a shortage of employees, but this is changing as we speak, with many already announced layoffs from major firms in the works. Before 2023 is finished, the employers will be back in the driver’s seat, setting schedules and calling all the shots again, best to cut up a few pairs of these pajamas and make room for your office accord, its coming. The recession will kick the dust of the underperformance and may the best man/women get the job opportunity presented before them.
Life lessons has taught us to always be pleasant, professional and to keep our noses clean and your resume will stick out on top of the totem pole when the engine fires up after the downturn, “never burn your bridges”, wood is expensive.

Trudeau two years ago was pounding his chest and shouting out to the whole country, if you need money here it is, now he is pounding the table and saying, I want that money back. It’s unfortunate for Canada that this was paid out from our hard-working Canadian taxes, but it’s a blessing that these people for the most part, will get away with Trudeaus stupidity on asking for the gifts to be returned, before it ever reaches a courtroom, the two years status will have kicked in and Trudeau and his clowns can go pound salt until the cows come home. Ottawa was throwing so much money around, they at times ran out of people or places to hand it all out to, buying votes only works until the money is gone, looks like for some, lessons are hard to learn.

Home ownership, CREA is showing inventory building quickly on a national level, meaning the home sales are continuously slipping and more likely will be considered a slide by the time we get into this non-stoppable recession and out again next year. if you are buying a home, there is a slight chance you may even be lucky enough to get prices back to pre-pandemic levels, there is no telling right now, how low home prices will go. If you lesson to the realtors, today is your best bargain, if you lesson to your own common sense, it will be 2023 or early 2024 to get your best deals, it’s your money, spend it wisely. It’s how you deal with failure that determines how you achieve success.

Looks like the markets after the initial 2:00 PM shock have somewhat now bought into the interest rate hike today, most of the stocks are pointing North into the Green, even BITCOIN, TESLA, FEDEX and FORD are making a few dollars.

#11 Terry on 09.21.22 at 3:06 pm

“It’s still a good time to be alive. A great time to buy stuff.”

Correct Garth! Every day above ground is a good day! Always still investing. Building higher dividends as prices keep going on sale. Buying quality stuff that continues to pay you to own still keeps working.

Life is good!

#12 Søren Angst on 09.21.22 at 3:12 pm

#6 Caffeine Monkey

They are soothed because year end rates and ranges provided in their “Summary of Economic Projections” document released 30 min. before the rate hike announcement.

4.4% by year end is hardly soothing, at 3.25% today. The range is 3.9–4.6% by year end.

The above means Nov 1-2 and Dec 13-14 FOMC meetings will add:

1.15% [+0.65 to +1.35%] to today’s rate by year end.

——————

Pretty sure Mr. Market has not figured this out yet.

… but it will.

#13 Doug t on 09.21.22 at 3:12 pm

But but what about the NUKES

#14 Squire on 09.21.22 at 3:27 pm

#7 The Great Rug Pull on 09.21.22 at 2:56 pm
———-
It’s easier to blame someone else for our own mistakes. Never buy more than you can afford. Hasn’t Garth hammered that message for years ?

#15 Søren Angst on 09.21.22 at 3:31 pm

#3 Faron

Well, Putin’s mobilization announcement yesterday is going over like a lead balloon in Russia as I type. Happening from Moscow, St. Pete’s all the way to Siberia.

Lot’s of protests.

Lada for your Son
https://twitter.com/nexta_tv/status/1572632931805581313

“Detentions” w/Russian TLC
https://twitter.com/bbcrussian/status/1572638919862226949
https://twitter.com/igorsushko/status/1572662391602827265
https://twitter.com/AlexKokcharov/status/1572627156273926145

Window seat view at Russian Starbuckski:
https://twitter.com/Odessa_Journal/status/1572650762131623937

… blyat

#16 Steven Rowlandson on 09.21.22 at 3:32 pm

“A cottage is not an income-producing asset so there is no interest deductibility. – Garth”

I don’t like to think of real estate as an investment as you well know by now, but a cottage could be rented out to tenants on a full or part time basis. Wouldn’t that make the cottage an income producing asset if a profit was produced?

Only partially since the property is also owner-occupied. – Garth

#17 Michael Bolton on 09.21.22 at 3:34 pm

Excuse my ignorance, but if the goal is to have investment gains attributed to the lower earning spouse, just set him/her up a non-reg account and plop the money in.

That’s a gift. Attribution rules apply. – Garth

#18 Big Bucks on 09.21.22 at 3:41 pm

The 2 year treasury just went above 4% which is still very low.In 1990 it was 10%,1994 8% and 2006 5.3%—all when inflation was way less than what we have now.It could be safe to assume the overnight rate will hit 6%.Nobody wants to be in equities(add new money)while we go up to that level.We sell off from here and who knows how much.Remeber the Dow went from 7000 to 37000 from 2009(we’re only back to 31000)Could we see 25000 by this time next year?Absolutely.

Trying to time a bottom is absurd. When you have the money, invest it. – Garth

#19 Gerald on 09.21.22 at 3:43 pm

Garth, it really looks like we are heading for a calamity of some kind in the short/medium term.

Nouriel Roubini has articulated this very well just this week.

He predicted the 2008 crash correctly. In 2021, he predicted a recession in late 2022.

Here’s what he says now:

https://financialpost.com/news/economy/dr-doom-roubini-expects-a-long-ugly-recession-and-stocks-sinking-40

“…a “long and ugly” recession occurring in both the US and globally at the end of 2022, which could potentially continue through the whole of 2023.”

“…as rates increase and debt servicing costs grow, many zombie institutions, zombie households, corporates, banks, shadow banks and zombie countries are going to die.”

“It’s not going to be a short and shallow recession, it’s going to be severe, long and ugly,”

Some funds “are going to implode”

Stocks may drop by 40%

This guy has a sharp track record. I’m betting he is correct yet again. Staying liquid with lots of cash looks smart.

https://ca.investing.com/news/stock-market-news/nouriel-roubini-dr-doom-expects-a-severe-long-and-ugly-recession–bloomberg-432SI-2775281

He predicts a recession every year. His track record is muck. – Garth

#20 Legal Beagle on 09.21.22 at 3:44 pm

#7 The Great Rug Pull on 09.21.22 at 2:56 pm

“Our message to Canadians is that interest rates are very low and they’re going to be there for a long time”

– Tiff Macklem, July 2020

Millions of Canadians who acted based on that lie are now ruined or soon will be.

ABOLISH THE BOC

******************************************

Classic blunder… Was Tiff really lying?

Tiff never defined “low” … or “long time”

Following Pepe’s election, if I was representing the Tiffster in his wrongful dismissal case I would say first that 3.25% is still “very low”, on a scale from 0-100%… So where’s the lie?

If 3.25% is not “very low” then we turn to a “long time” which is similarly vague… depending on scale July 2020 to March 2022 can be quite a “long time”- ~14,592 hours seems pretty long to me… Imagine spending 14,592 hours reading this blogs comments…Again where is the lie?

The problem is Canadian’s who took on debt after Tiff’s comments did not take the time or do not have the capacity to really understand what he was saying… He didn’t say rates would be low forever… which is what you’re implying he said.

#21 Søren Angst on 09.21.22 at 3:45 pm

#3 Faron

PS:

All flights out of Russia booked until Friday.

https://twitter.com/Telegraph/status/1572550743395278848

Apparently very popular with Russian men aged 15-65 yrs old.

Prices after 300K “Reservist” call up where North of $10K/seat to fly to Turkey from Moscow.

35 km car line-up at Finnish border.
https://www.express.co.uk/news/world/1672530/Russia-Finland-border-Vladimir-Putin-mobilisation-decree-Ukraine-invasion-war-military-vn

Other popular border crossings:
https://twitter.com/sotiridi/status/1572664801222066176

#22 Ronaldo on 09.21.22 at 3:46 pm

You will never get this kind of advice from the [email protected] or from your mutual fund representative. And for free. This is great advice once again.

#23 TurnerNation on 09.21.22 at 3:51 pm

Thank you Fed may we have another :-(

Three days ago:::

#17 TurnerNation on 09.18.22 at 12:03 pm
This is the kind of week advisers and advisors should be ready. Before or because of the Fed on Wed a likely final 5-6% down-day-flush.
“Get me to cash!!”. Tell em fine, here are the GIC Rates, here is your login and password to TD Slaughterhouse online brokerage, have at er.

#24 crowdedelevatorfartz on 09.21.22 at 3:55 pm

@#137 IHCTD9
“Gas is in the 1.30’s locally. ”

+++

Gas is $2.03.9 in the Lower Brainland today.

https://vancouver.citynews.ca/2022/09/21/metro-vancouver-gas-prices-jump-supply/

#25 Pepe's Secret Weapon on 09.21.22 at 3:56 pm

I’m not really a Poilievre fan but how have we not heard more of his wife, Anaida? She’s a political force in her own right. I freely admit she is NOT who I would have immediately pictured as PP’s wife. Had no idea he was even married.

Why IS it that I haven’t seen a second of this footage on any of the major news outlets? Regardless of one’s opinion of the Conservative party they are still one of the three major political entities in the country!

Got me thinking – could it possibly be that the political foes of the Conservatives don’t want attention drawn to an attractive, articulate, trilingual Latina immigrant Canadian as the wife of a Conservative party leader? I mean, after all, we all know that “Cons” are all just horn-honking white middle-age trucker thugs. She certainly puts paid to that ugly little trope lol. Wow.

Trudeau is being “out-Sophied” at his own game. Check it out.

https://www.youtube.com/watch?v=08xTw1B_wSE&t=254s

#26 Squire on 09.21.22 at 3:57 pm

#15 Søren Angst on 09.21.22 at 3:31 pm
————————————————
Sad. Off to the meat grinder they go. Now it’s a matter of who’s first, the young lads or Putin…

#27 DON on 09.21.22 at 4:03 pm

#7 The Great Rug Pull on 09.21.22 at 2:56 pm
“Our message to Canadians is that interest rates are very low and they’re going to be there for a long time”

– Tiff Macklem, July 2020

Millions of Canadians who acted based on that lie are now ruined or soon will be.

ABOLISH THE BOC

******
Two years is a long time!

#28 Søren Angst on 09.21.22 at 4:04 pm

Apparently PM Chanteur de Salon is going to Japan for PM Shinzo Abe’s state funeral in Tokyo.

https://twitter.com/CTVNews/status/1572674859485876225

Of course I passed on this video song he can practice before getting there. You know, when he goes to a Sushi bar with a piano …

https://www.youtube.com/watch?v=C35DrtPlUbc

Lyrics also included for our international Chanteur at large.

#29 Søren Angst on 09.21.22 at 4:06 pm

#26 Squire

I’ll say.

Kiss the ground of 🍁 that you stand on.

#30 yvr_lurker on 09.21.22 at 4:06 pm

The loan seems like a good strategy if there is a large disparity in income between the two spouses. Not our case though. It seems like a loophole that could be closed, and the feds seem slow to have put an increase on the 2% rate.

What I don’t understand is the sentence.

“This is unlike a gift of money, in which case the loving donor is whacked.”

This doesn’t make sense. Does this refer to if I give 100K of after-tax dollars to my hypothetical wife to invest (and not a loan) and grow, and she was in a lower tax bracket so that the tax on the growth is lower, is this somehow against the rules? Just transfer the funds from my account to her sole account and that’s the start. What if I give 10K to a relative (as I have done in the past) in my aftertax dollars.

#31 epic bear on 09.21.22 at 4:09 pm

by now it should be obvious to anyone that the June lows will not hold and the next area of support is 3000-3200 on the SPX. that is anywhere between 15-20% lower than today. this will happen quite suddenly and quite abruptly. (in the next month)

why?

stock market gains in 2020 and 2021 were illusion. propped up by zero rates and printed money.
did markets go up, did you make money invested. sure. you had no choice. but that is now all gone.

the FED just announced they expect 4.4% FED FUNDS by year end and 4.6% for all of 2023. and they will continue to reduce the balance sheet.

stocks are NOT WORTH 17X PE’s

the US ECONOMY is already in recession. (Q1, Q2 negative and Q3 on it’s way to being negative)

earnings will FALL starting in Q4 (see Ford, FedEx etc)

plus Fed Funds at 4.5% (zombie companies are done)

SP projected Q4 earnings at $232 are fantasy and not going to happen. the bubble has burst. it’s all over. lots more pain on the way

Epic Bear Market

#32 epic bear on 09.21.22 at 4:12 pm

the gamma squeezes that propelled the market to the upside in 2020 and 2021, will now be reversed. instead of excessive call buying by participants forcing dealers to buy stock, excessive put buying will force dealers to sell stocks.

#33 Søren Angst on 09.21.22 at 4:16 pm

FALLEN ANGEL

Angel
How to take advantage of CRA, I mean, who doesn’t like that?

Fallen
My Liege, you are the one always saying Cdns pickled in debt, look in the mirror for the culprit, etc.

So now are you advising your loyal flock (a “Murder”) to take on more debt?

Oh Garth … Mea Culpa

Still love you though and of course, let the bullets fly My Liege.

#34 crowdedelevatorfartz on 09.21.22 at 4:23 pm

@#26 Squire
“Off to the meat grinder they go.
Now it’s a matter of who’s first, the young lads or Putin…”

+++
One would hope Putin.
Considering the “sold out” one way flights out of Russia and the 35km lineup out of Russia at the Finnish border…..
The unpopularity of this war at home seems to be reaching a boiling point.
Only a matter of time before Putin’s own people turn on him.
Either killed outright or captured, trial, and killed.

#35 Jack M. Keens on 09.21.22 at 4:24 pm

#7 GRP – Interest rates, despite recent increases, are historically low. Greed and stupidity, however, seem constant.

#19 Gerald – The ‘great’ Roubini has predicted 10 of the last 3 bear markets. He is currently 95% in cash where he loses 7% of his purchasing power annually.

#36 yvr_lurker on 09.21.22 at 4:25 pm

answered my own question: attribution rules apply. If I have 100K from a back-yard money tree, I can gift it to my wife, but if she invests it the growth is then taxed at my rate and not hers. Seems like a rather difficult scenario for the CRA to monitor as EFT transfers between bank accounts are not reported if they are under 10K. Not too hard to get to 100K over a few months.

Yet, it seems as though rules of attribution don’t apply if parents gift their kids 100K as a downpayment on a house. During the pandemic, a house flip (outside one year) starting off this way would have generated a sizeable tax free capital gain. (of course now it would be financial suicide).

Tax code seems to have some rather arbitrary rules.

#37 Caffeine Monkey on 09.21.22 at 4:26 pm

Annnnnd the market tanked hard in last hour. Lesson: ignore short term (and especially very short term) moves and just worry about the decades-long time horizon of your retirement portfolio.

#38 For the Real Story on 09.21.22 at 4:26 pm

Just Google “Pavel Filatyev”.

Russian paratrooper, fought in Ukraine, posted a 140-page account of the realities of the war and what he saw.

Now seeking asylum in France. Fascinating stuff.

Animals. Looting and worse, just like Czechoslovakia in 1968. There to “free” their “brothers”.

As US ambassador of the time George Ball said “the kind of fraternal assistance that the Soviet Union is according to Czechoslovakia [Ukraine] is exactly the same kind that Cain gave to Abel”.

Nothing ever changes in Russia. Or in Putin’s mind.

#39 Søren Angst on 09.21.22 at 4:29 pm

#6 Caffeine Monkey

Told you so.

Mr. Market finally got around to reading the Table 1 Economic Projections, Rate Projections, GDP Projections, etc. in

https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20220921.pdf

and is currently having an infarction.

https://www.google.com/finance/

Dow down 1.70% -522.45 pts as I type.

Expect Mr. Market to continue discounting future cash flows by the new rate numbers from the US Fed.

As Garth said:

“Rates rise 75 basis points with lots more to come. Wall Street seems convinced the CB aggression will usher in a recession.”

#40 habitt on 09.21.22 at 4:29 pm

When can we get back to there is a cost to borrow money and savers especially ones on fixed income can get a reasonable return on their nest eggs without being exposed to markets? It’s been what 14 years?

#41 active on 09.21.22 at 4:38 pm

if i open up a non-reg account and my spouse e-transfers me the $100K … i then deposit that money into the non-reg account – how the hell does the CRA know to apply the attribution rules? they dont…jeezz..

#42 Diamond Dog on 09.21.22 at 4:40 pm

20 Legal Beagle on 09.21.22 at 3:44 pm

Right you are LB, right you are.

#43 NOSTRADAMUS on 09.21.22 at 4:41 pm

WAS IT REALLY WORTH IT. ???
Numerous #1 realtor’s i have known over the year’s all have the same story in common. They climbed and climbed to the top of Heartbreak Hill. It was a difficult and arduous climbed. Things they left behind, marriage, children, health and peace of mind. They never looked down as they climbed over the bodies of friends and foe’s. Enemies they stabbed in the back, Family and best friends they stabbed up close in the front. Heartbreak Hill has two sides, one up, one down. Now with an ill wind blowing, you find yourself all alone. I ask, was it really worth it ? Finally the voice of reason

#44 Søren Angst on 09.21.22 at 4:44 pm

#34 crowdedelevatorfartz

I defer to your 2nd last sentence.

The last sentence, would result in a revolution, putsch, or similar.

And if the War is destabilizing, your last sentence (I sympathize by the way) would paralyze the World with fear of the unknown.

The best scenario is a quiet putsch where he remains head of a caretaker government with the “putschees” pulling the strings in the background until matter stabilize in Russia.

That would probably be the best of outcomes, not just for Russia and its people, but for the Free World as well.

#45 Dear Britain please forgive us on 09.21.22 at 4:46 pm

DELETED

#46 Brian on 09.21.22 at 4:55 pm

2023 is going to be a belt tightening year for lots of major corporations. People better hope that they spent the last two years making themselves as indispensable as possible.

Companies are looking around for places to cut to save money and they are targeting the stay-home-stay-safe crowd, the people who imagined that life was perfect because they could move from doing nothing at the office to doing nothing at home.

#47 Diamond Dog on 09.21.22 at 4:56 pm

I posted these chart comparisons with Crypto and the Nasdaq a few months back for readers. It’s charitable to do this for the young once again. Below is a chart of Bitcoin:

https://www.cnbc.com/quotes/BTC.CM=

And Ethereum:

https://www.cnbc.com/quotes/ETH.CM=

Now the Nasdaq:

https://www.cnbc.com/quotes/.IXIC

Is there much difference? No, not much. Where the NASDAQ goes, so goes Crypto. I do hope readers make a connection as to why I’m down on Crypto. Now, if you young folk think the NASDAQ is going “to the moon” with the Fed hiking rates, you likely also believe in Santa and that maybe your daddy will buy you a pony. One would have to be quite… young to believe in such things.

It took 2.5 years for the NASDAQ to bottom from 2000’s bubble. If we go back further in time with bubbles, peak to trough is measured in years. (Go to max NASDAQ chart, you’ll see it) If history is any indication, we aren’t half way there. The Fed if we can trust them, (we can’t but some still do), is talking rates above 4% into 2024 so watch and learn kids, watch and learn.

#48 Ballingsford on 09.21.22 at 5:03 pm

So, loan spouse $10,000 to keep it simple. She buys non-reg stuff, ETF mutual funds or something weighted 60/40 or maybe even 80/20.
In a year or so, markets recover. Now the $10,000 has grown to $20,000.
Sell or hold.
She sells, $10,000 capital gain. Pays tax on $5,000. Maybe $1,000.
We are $9,000 richer and she buys me dinner.

#49 ElGatoNeroYVR on 09.21.22 at 5:10 pm

That’s a gift. Attribution rules apply. – Garth
============
Why can’ we move to familly unit based taxation and simplify these archaic rules designed to confuse everyone. Move to flat rate taxation while at it and watch the tax accountants and half of the CRA dissapear overnight.
Wishfull thining I know but it would be so so worth it !

#50 6% right way on 09.21.22 at 5:18 pm

Interest rates are still a joke. The Bank of Canada, US Federal Reserve, Bank of England, Bank of Australia, Bank of New Zealand, ECB etc. all need to be 6% right away.

#51 Randy on 09.21.22 at 5:19 pm

The CRA and the IRS are gone….their legacy computers are still are out notices…Ignore them.

#52 Bonobo on 09.21.22 at 5:32 pm

DELETED

#53 handsome ned on 09.21.22 at 5:35 pm

Be thankful for small mercies. At least Justin did not sing the Sex Pistols version of God save the Queen.

#54 Quintilian on 09.21.22 at 5:37 pm

#7 The Great Rug Pull on 09.21.22 at 2:56 pm

“ABOLISH THE BOC”

Crazy talk.

Not now that it’s finally guided by economics rather than political suasion.

Don’t be a Pepe

#55 Søren Angst on 09.21.22 at 5:38 pm

Russian exodus Flightradar24 style.

https://twitter.com/flightradar24/status/1572630639655927815

I like it that some of them went to Kaliningrad Oblast. Cheaper flight? Shorter too.

There are a few flights shown that look like they are headed to the N. Pole and beyond.

Svalbard? Kanuckistan?

[better watch out Yukon Elvis, Sasha might be dropping by for dinner]

#56 Shawn on 09.21.22 at 5:43 pm

Loan your spouse cash at 2%?

One problem. Very few sort of regular people have any such cash to lend. Especially around this blog where holding cash is discouraged.

Presumably not worth the bother unless you have at least 100k to lend. Who needs the extra paper work for say $20k?

These rules are to benefit the 0.1% who have say a million in cash to lend to a spouse.

#57 WTF on 09.21.22 at 5:44 pm

#48 “We are $9,000 richer and she buys me dinner”
————————————————————–
Almost Similar:

Been doing this for about 7 yrs now, exactly as GT describes.
200k, Promissory note created at the prescribed rate (1% forever)
She is now equal in terms of investment $ with me Invested 60/40 B+D per Garth, Jack Bogle, Warren.
Pays me Interest every Jan, 2k
Records are kept diligently
CRA accepts this with 0 blowback.

I buy the dinner

#58 Feds on 09.21.22 at 5:48 pm

Garth, Is this same structure available with children? Can I loan them money with an agreement?

Adult tax-paying children. – Garth

#59 blobby on 09.21.22 at 5:55 pm

#7 The Great Rug Pull on 09.21.22 at 2:56 pm

Rates WERE low for over 2 years.. That’s a long time.. (unless you’re 5 years old)

#19 Gerald on 09.21.22 at 3:43 pm
Google “nouriel roubini predictions 2020” : When he said 2020 would mark a “great depression”

Google, “nouriel roubini predictions 2019”: When he said there would be a “Synchronized slowdown”

2018 : Big crash – Bitcoin will crash to 0
2017 : Bitcoin giant speculative bubble (I agree on this one, you’d be a bit dim to not)
2016 : Roubini the Mother of All Asset Bubbles Will Burst in 2016

Google.. well any year really.. and his name, since he was last correct in 2008.

#60 Yukon Elvis on 09.21.22 at 6:00 pm

#13 Doug t on 09.21.22 at 3:12 pm
But but what about the NUKES
++++++++++++
We have nukes too. He / they know that we will retaliate. Not an issue.

#61 Nonplused on 09.21.22 at 6:11 pm

“Putin is out of control, calling up 300,000 recruits for the Ukrainian war and threatening to nuke Europe.”

Are you sure you know what that means?

I thought he said the nuclear triage was working as designed. In other words to make it inconceivable for NATO to attack Russia. He’s just making it clear the radar is still on and functioning. I suppose maybe he could just not talk about it, but that wouldn’t change anything. It’s still there. Has been since the 50’s.

I’m pretty sure that since the west has made it pretty clear that their objective in this war is the total elimination of Russia as a military threat and independent economic entity, Putin and many others are watching their radars quite intently.

The 300,000 is probably just a combination of troop rotations and a bluff. You’ve got to give the guys at the front some time off or they grow weary.

It looks to me that the war is entering a new phase, most of the original objectives already having been accomplished. Time to dig in and wait for winter. However anyone with any military experience in the west knows that winter will not be on their side, and the time to act is now. And Russia knows that we know. And we know that they know that we know. And they know that we know that they know that we know. There is nothing about the situation that both sides don’t understand.

So expect a furry of activity from Ukraine in the coming months with many “inspiring” victories while Russia mostly just waits for the snow.

You (pro-Kremlin, for some unknow reason) said the objective of those nations assisting Ukraine to survive is “the total elimination of Russia as a military threat and independent economic entity.” Please source that. News to me. (And Rumble, Telegram or Truth Social don’t count.)- Garth

#62 45north on 09.21.22 at 6:22 pm

Pepe’s Secret Weapon I’m not really a Poilievre fan but how have we not heard more of his wife, Anaida? She’s a political force in her own right. I freely admit she is NOT who I would have immediately pictured as PP’s wife. Had no idea he was even married.
Why IS it that I haven’t seen a second of this footage on any of the major news outlets? Regardless of one’s opinion of the Conservative party they are still one of the three major political entities in the country!
Got me thinking – could it possibly be that the political foes of the Conservatives don’t want attention drawn to an attractive, articulate, trilingual Latina immigrant Canadian as the wife of a Conservative party leader? I mean, after all, we all know that “Cons” are all just horn-honking white middle-age trucker thugs. She certainly puts paid to that ugly little trope lol. Wow.

yeah how come?

How about Jag’s wife? – Garth

#63 Inadequate on 09.21.22 at 6:26 pm

Garth,
Are You telling me that the government knows what portion in our joint account is hers and what portion is mine? It sounds really silly.

The law is the law. Gains on gifts are attributed. Gains on loans are not. – Garth

#64 HateTiff on 09.21.22 at 6:43 pm

Exactly! I was one of those who drank his kool-aid and bought multiple properties. I am lucky, for being a 1% millennial, his bullshit microscopic increases has not done much damage to me financially. And in fact I know I will be okay because he has very little to no room to raise much more in the future since inflation has tapered off. I expect by next year the guy will start slashing rates like crazy. Why? recession! {Raise middle finger} at the T man.

#7 The Great Rug Pull on 09.21.22 at 2:56 pm
“Our message to Canadians is that interest rates are very low and they’re going to be there for a long time”

– Tiff Macklem, July 2020

Millions of Canadians who acted based on that lie are now ruined or soon will be.

ABOLISH THE BOC

#65 Damifino on 09.21.22 at 6:46 pm

#7 The Great Rug Pull

Millions of Canadians who acted based on that lie are now ruined or soon will be.
————————————–

Are those the same millions who failed to read and heed greaterfool.ca?

#66 Diamond Dog on 09.21.22 at 6:52 pm

Some thoughts on the war in Ukraine.

The smart money says we will not see sanctions lifted from Russia for the rest of the decade. Until there is political stability in Russia, these sanctions will remain. The Soviets have remained in power outside of the late 80’s early 90’s for the last 100 years. If something was to happen to Putin, it’s more likely than not that we see another strong man in his place.

Russia simply has this history or dictators and strongmen for leaders because it ensures their enablers incumbency does that make sense? Russia has been so conditioned… normalized… Until political stability rises up, revolution is probably the only path to it and who knows what will follow so likely for the rest of this decade, western sanctions will remain.

This is of course, under the assumption that Putin won’t use nukes and scramble the board if things don’t go his way. Its a dark time to even think of such possibilities that he would, but it is possible just as it was possible that Russia under Putin would try to expand it’s borders as I mentioned a few years ago with Trump in power a second term. Under that scenario, Russia would have invaded Ukraine unchecked by the west, conquered Ukraine within 6 to 8 weeks and kept going west.

Make no mistake, the Russian plan to invade Ukraine was in the works for years and evolving, most likely for 20 years or more, likely since Putin’s rise to power in 99′. Putin had counted on Trump to win to make it a cakewalk. It was Trump’s to lose. Trump didn’t win and Putin still invaded Ukraine. When our minds get fixated on something and desire becomes that strong, well…

There have likely been some surprises to the Kremlin but what we have seen so far with the conflict, much has been anticipated by Russia. The West’s reaction to the war, U.S. support for Ukraine, the long term consequences, commodities and currencies used as weapons, the current map of occupied territory in Ukraine (roughly 20% Russian) this has all been pre thought out not just in Russia but in the U.S. and NATO including Ukraine. There’s plenty of evidence to support this just by reading military responses alone.

Where is Russia’s options from here, once Putin committed to a war with Ukraine, the trend of escalation is the most likely path and will continue to be for Putin to keep his grip on power. There isn’t much turning back for Putin. If Putin was to back out of Ukraine now, he would likely face impeachment and likely be replaced within a year. “War justifies his (and his enabler’s) position(s) in power” so, expect more war and an escalation of war until there is a definitive winner and loser.

Will Putin go down swinging? He’s moving more chips into the center of the table and will continue to do so. 300,000 reserve conscripts are conscripts with former military experience. If we look at what Enwiki has to say:

https://en.wikipedia.org/wiki/Russian_Armed_Forces

“On 1 January 2008, a number of 2,019,629 units, including military of 1,134,800 units, was set.[19] In 2010 the International Institute for Strategic Studies (IISS) estimated that the Russian Armed Forces numbered about 1,027,000 active troops and in the region of 2,035,000 reserves (largely ex-conscripts).[20] As opposed to personnel specified by decree, actual personnel numbers on the payroll was reported by the Audit Chamber of Russia as 766,000 in October 2013. – enwiki

If these IISS numbers are an accurate reflection of the souls Putin can mobilize, Russia has roughly 700 to 800k of military personnel on it’s payroll. At the moment, Ukraine has 700,000 in it’s armed forces. Lets keep in mind these Russian numbers are 3 branches of the armed forces. The Navy component would be a sizeable component so the numbers of specialized ground forces are smaller, likely a ballpark 2 million including their active forces now.

All told, Putin can assemble ground forces with past experience numbering around 2 million before conscripting citizens with no experience. This is due to a Russian law that forces every Russian able bodied male to serve at least 1 year between the ages of 19 and 27. (unless of course your parents are wealthy and can bribe officials, its a thing)

Casualties count on both sides here but more so for the Ukrainians. If we look at the narrow lens of conscription of reserve arm forces, Ukrainians are outnumbered roughly 3 to 1. Ukraine’s military hardware is also outnumbered by a similar count. The advantage Ukraine has is home field and support from the West. Both are aces.

If the U.S. under Biden specifically wasn’t there to support Ukraine, I can say with certainty that Ukraine would lose this war. Perhaps with another Democrat leader the outcome would be less certain, but none of the other candidates in the presidential election were as good as Biden for this role in warfare. Under Trump, this war would have already been lost and NATO would have been thrown in to chaos. The market losses from this alone would have been catastrophic. People who don’t know this are just not paying attention.

If we go through the list of past Dem presidential nominees, Biden is, largely through experience, the most qualified Dem presidential candidate for this war. Republicans unfortunately had a forfeit candidate and still do with Trump to their shame by the way, its to their shame.

But I digress, this war has entered a new phase. It will take months, likely a better part of a year to mobilize 300,000 fresh conscripts into Russia’s “cause” into east and south Ukraine, most likely sometime next spring. As it is, new conscripts will rotate in giving present exhausted troops a break. We may not see a doubling in troop size for Russia until at least the spring of next year if that’s even possible with 300k in conscripts. In other words, this war will drag out.

Casualties will increase daily. Newer warfare technologies will be introduced as we have already seen. All directions point to future escalation. Putin is backing himself into an “all in” scenario. Commodities will continue to be used as weapons of war. More death, more war crimes, some surprises but no one should be surprised with future escalation of war.

That said, the risk of nuclear or partial nuclear war has been elevated and will increase over time. We will definitely hear increasing rhetoric from Russia concerning nuclear attacks disguised as defense and as such I think it’s necessary to talk about this at least once in great detail, but not today at least for me! Today I still have some menial field work to tend to.

Have a good week everyone. Enjoy “normal” when we get it cause one never knows how long it will last and can always be worse.

#67 Steven Rowlandson on 09.21.22 at 6:56 pm

I have to say that Vladimir Putin screwed up.

First of all he lost the moral high ground by not adopting a strictly defensive strategy in respect to the LPR and DPR and secondly he really needed to present the whole operation as a great patriotic war against a genuinely credible threat. He also needed to be honest and upfront about the whole thing and dispense with the training exercise nonsense. The right sector and Azov units work for Israeli oligarchs therefore their NAZI credentials are a farce. A false flag OP to get the Russian government to do something silly and start a major conflict with NATO. Dumb idea that has come close to working. Russians have got to let WW2 die and so should Americans and other allies. It messes with their minds and clouds their judgment. They see NAZIs everywhere when there are none. It lets modern day gangsters get away with much criminal activity.

All wars are ultimately bankers wars and Putin likes Gold and doing his own thing. The powers that be in the west evidently don’t approve.

#68 Ustabe on 09.21.22 at 6:57 pm

Anaida Poilievre’s Instagram is @prettyandsmartinc.

Sounds like they were made for one another.

#69 crowdedelevatorfartz on 09.21.22 at 7:04 pm

@#61 Nonplused= Minus

Your endless pro Putin drivel neglects to mention one thing.
Putin doesn’t care what happens to anyone else other than himself.
Russia, it’s troops, it’s people, can all burn in a Nuclear fire for all he cares.
As an only child his parents doted on him and spoiled him rotten.
When he went up to Northern Russia to work for the summers for extra money.
He would return with enough extra cash for the school year and a bit left over.
The first year he returned and gave his father nothing, his mother a cake and he bought a very expensive leather jacket for himself.
The second year he returned and gave his father nothing. He gave his mother flowers and bought himself a car.
When he was a KGB agent in East Germany when the Wall fell he returned in his shabby Russian car and a stolen western refrigerator tied to the roof.
The guy was a thug, a brute, a thief and a liar.
Now you can add dictator and mass murderer to that CV.

#70 ElGatoNeroYVR on 09.21.22 at 7:05 pm

53 handsome ned on 09.21.22 at 5:35 pm
Be thankful for small mercies. At least Justin did not sing the Sex Pistols version of God save the Queen.
========
Followed by The Dead Kennedies – Kill the poor and end with Nina Hagen’s rendition of “My way” or maybe “Pillow Talk” given the hour.
That would’ve been the perfect trifecta for our glorious PM and surely engraved forever in the memory of political peoplekind.

Good memories of my early school years ,classics all the way into the 80’s .

#71 the Jaguar on 09.21.22 at 7:08 pm

@#144 kommykim on 09.21.22 at 2:37 pm
I was camping in a BC provincial park a few weeks ago and went for a walk around the campsite loop. There was a guy with a battery powered leaf blower blowing the leaves off his shiny new black truck.
Some people are just obsessed with these things. Who brings a leaf blower camping?++++

Short answer” an A-hole. Unfortunately every reason to believe he could be an Alberta resident. With roots in Saskatchewan, lol!

Sue me Saskabuskaroos! I’m in the mood to offend everyone today!

#72 Hal on 09.21.22 at 7:12 pm

Gold is going to 5,000 Canadian dollars an ounce by 2025 to 2026 the latest as inflation is still in the beginning stages.

Bullion has been a disaster and will continue as long as the US$ is strong. Don’t throw your money away on rocks. – Garth

#73 Hola Senor Garth on 09.21.22 at 7:26 pm

Could you possibly do a blog post on what is an effective tax rate on say a stock or etf? Or point me in the direction of a past article that esplained this term.

gracias

#74 Victor Llearna on 09.21.22 at 7:38 pm

Learned new word today: besmirched

Perfect world for trudeau and the liberals to use in sentence:

Trudeau and his band of incompetent liberals were besmirched long before even the WE scandal

#75 wallflower on 09.21.22 at 7:39 pm

Given the stance, methinks Ollie is panting for a seatbelt.

#76 45north on 09.21.22 at 7:54 pm

Diamond Will Putin go down swinging? He’s moving more chips into the center of the table and will continue to do so. 300,000 reserve conscripts are conscripts with former military experience. If we look at what wikipedia has to say:
https://en.wikipedia.org/wiki/Russian_Armed_Forces

In Russia, the model is the Second World War. It’s the only model. The Wikipedia article describes the Russian Armed Forces in the scenario of Germany sending a million men to invade. It hasn’t. Putin tries to recast the present situation as the Second World War. It isn’t. He has bet his life on this recasting.

I know a man, Alex, from Russia. His two sons Roy and Jonathon are coming up to military age. Now Alex and his sons are in Canada but I suppose there are a lot of men like Alex in Russia. I wouldn’t try to put anything over on them.

#77 fishman on 09.21.22 at 8:05 pm

When the U.S.S.R. collapsed in 1990 the U.S. went to great lengths to repatriate the Soviet nuclear arsenal back inside Russian borders. They paid the salaries of their nuclear scientists so they wouldn’t hire out to a “terrorist” countries. Russia had no money & we may never know how much the U.S. sent over to cover the costs of safe collection & storage of nuclear weapons & material. It had to be in the billions. Then it was doable because the collapse was internally generated. And we had leaders of wisdom like Reagan with his great secretary of state, James Baker. Till somebody on our side comes along that can think resolution instead of victorious revolution the best option is a grinding conventional war of attrition. We know this because Nato isn’t giving the Ukes weapons like their 300 km missiles. Their pulsing their war equipment to the front. Titrating their weapon system level of sophistication as needed for tactical victories. This is a bad war strategy because it allows the enemy time & information to develop countering tactics. The Chinese must be ecstatic learning Nato’s latest secret weapon developments & tactics. Well not all because the U.S. always holds some stuff back. Nothing else we can do. Nato wants to hold Russia but afraid to break Russia. There must be more than a few of us out there that see this situation as exquisitely dangerous.

#78 Bytor the Snow Dog on 09.21.22 at 8:06 pm

“Nothing really matters,
Anyone can see.
Nothing really matters…
Nothing really matters…but meeeee…”

-Justin Trudeau-

#79 Schadenfreude on 09.21.22 at 8:07 pm

@HAL- #72 It is only the beginning of the chaos we will witness in the western countries – Rise of the Nilar
—————————-
re article “Africa’s Way Out of Monetary Colonialism”

“The ‘Nixon shock’ that was the final step in a long and government-orchestrated transition to fully fiat money that started with World War I. In essence, the fateful Nixon shock is how we, humanity, ended up shackled by fiat money regimes. And the instability, inflation, and more frequent crises result from it.”

#80 Quintilian on 09.21.22 at 8:08 pm

#72 Hal on 09.21.22 at 7:12 pm
“Gold is going to 5,000 Canadian dollars an ounce by 2025 to 2026 the latest as inflation is still in the beginning stages.”

Not likely, but if Pepe is elected, and adopts Krypto, you may be able to get 5,000 Bitcoins per ounce.

#81 Doing my Part on 09.21.22 at 8:08 pm

Bitcoin, going to $0, get out while you can.

#82 Warren-the-lagging_indicator on 09.21.22 at 8:12 pm

My dog is like an extension of my emotional state.
I think about 5% further on the B&D from here, then deflation fears are stoked.

#83 Elon Fanboy on 09.21.22 at 8:19 pm

#71 Jaguar “Who brings a leaf blower camping?”

Actually many campers do.

https://www.irv2.com/forums/f258/leaf-blower-who-has-one-490748-2.html

#84 The Original Jake on 09.21.22 at 8:22 pm

The Great Rate Resuscitation is only half way done. We may pause next year… but the ascent will continue. House prices need to get whacked 40-50% more than currently before the bottom is in.

#85 jess on 09.21.22 at 8:25 pm

New York AG Letitia James’ case against the former president: that he never fully turned over all the financial documents he was supposed to supply to her office.
page 205

…”“Even after almost two years of litigation it appears that it may still be the case that not all responsive documents were produced,” the lawsuit reads. “Among other things, in litigation over a search warrant executed at Mar-a-Lago on August 8, 2022, the United States District Court for the Middle District of Florida noted that “the seized materials include . . . correspondence related to taxes, and accounting information.”
https://ag.ny.gov/sites/default/files/tto_complaint.pdf

#86 TFSA all the way on 09.21.22 at 8:36 pm

Just to clarify I would want to first top up my partners TFSA, before going the loan route correct? Or does money contributed to a TFSA get hit with the same Attribution rules.

No. – Garth

#87 Observer on 09.21.22 at 8:39 pm

#75 wallflower on 09.21.22 at 7:39 pm
Given the stance, methinks Ollie is panting for a seatbelt.

^^^^^^^^^^^^^^^^
As a paranoid dog parent I have a seatbelt harness for my dog that allows me to easily buckle him in using the car seat belts. Keeps him from interfering with the driver as well as from becoming a dangerous projectile or dead. Also he never rides in the front seat because…air bags.

#88 Wrk.dover on 09.21.22 at 9:00 pm

Re; camping with a leaf blower, and camp ground people as a culture.

When we paid homage to The General Sherman Tree, the largest living thing on earth, we parked in a smallish adjacent lot with picnic tables and bbq/fire pits for about 100.

There were few campers there, and we instinctively grabbed an up wind site and took a late afternoon nap. Around dark, we awoke to the strong smell of smoke, as in BIG FIRE!

The place had filled to full occupancy, and ours was the only site without a major fire lit in the bbq/pit thing!

I’m still perplexed on what all that fire was about.

Creatures in the dark? ‘Merica!

#89 crowdedelevatorfartz on 09.21.22 at 9:12 pm

@#71 the jaguar

Sorry.
Alberta has lots of crappy drivers.

https://globalnews.ca/video/9147333/wrong-way-driver-causes-major-crash-in-west-vancouver/

A 20 something female was driving the camper van.
Alberta plates. Pot plants and big bag of pot confiscated by police…..in video.

#90 TurnerNation on 09.21.22 at 9:13 pm

At least XRE.TO closed a tad green, haha??

—Life in Kanada:

So close to normal in this Kommunnist county. Papers pleeze. Bob Marley’s grandson denied due to the virtual Berlin Wall at the border. Beyond embarrassing at this point.

https://www.blogto.com/music/2022/09/skip-marley-cancels-toronto-show-border-canada/
“It then shows that Marley will be allowed back at which time “you are no longer prohibited from entering Canada by an order or regulation made by the Governor in Council under the Emergencies Act or the Quarantine Act and an officer will be able to examine your application to enter Canada.””

———- Science in Kanada! 10 people. Studies show…11 = doom. “”This is not a serious country””. Wag wag wag, pat on the head.

.Saskatchewan Court rules government 10-person outdoor protest limit justifiable (jccf.ca)

#91 crowdedelevatorfartz on 09.21.22 at 9:18 pm

The BC NDP has decided they have to DO SOMETHING about the rampant crime in BC.
One Kelowna man has over 400 serious criminal offences on his record.
Another man was involved in two serious stabbings in downtown Vancouver in two days.
Arrested, charged, released.

The NDP solution?
“We shouldn’t be calling prolific or chronic offenders …”prolific” or “chronic”……

It stigmatizes them and perpetuates negative stereotypes………..

As one shop owner who has been vandalized dozens of times.
“My brother is an addict. He doesn’t want help. Lock them up.”

#92 Drill Baby Drill on 09.21.22 at 9:23 pm

Inflation has only begun. Once this mess in Ukraine is sorted out (2024) then oil prices will attenuate however food prices will still be very high especially grains and feed. I bought my first house under Paul volker in 1981. We are no where near bank rates being rolled back.

#93 VicPaul on 09.21.22 at 9:31 pm

But, but….I ain’t got no sweetheart – isn’t there a chance for the single man? This is a couple’s world!!

Hey, is singlism a thing? You know, I feel….

M58BC

#94 Don Guillermo on 09.21.22 at 9:50 pm

#89 crowdedelevatorfartz on 09.21.22

Alberta has lots of crappy drivers.

https://globalnews.ca/video/9147333/wrong-way-driver-causes-major-crash-in-west-vancouver/

A 20 something female was driving the camper van.
Alberta plates. Pot plants and big bag of pot confiscated by police…..in video

*******
She was driving back to BC to visit her parents. They were planning on celebrating her new job.

#95 Sean on 09.21.22 at 10:03 pm

The US has been in recession and it’s going to get a lot worse. The recent Ford and FedEx earnings should be good indicators of what’s going on. Real estate and home builders are also hurting.

And that’s with that genius Biden selling oil from strategic reserve. That’s going to be done next month (of course, optimizing the timing of the bribe for the election). The price of oil could go up while economic activity goes down.

Anyway, economy is already hosed. Like I’ve always said: at 2-3 percent interest “this sucker is going down.” Maybe we’ll see a new QE or some new massive giveaway program in the US in 2023.

#96 Phylis on 09.21.22 at 10:08 pm

Is a tfsa segregated? Even if i’m the beneficiary?

#97 the Jaguar on 09.21.22 at 11:14 pm

@DON

Further to your interest in the UCP leadership race, just read this on the news feed:

‘Danielle Smith 45%. Travis Toews 28%. Brian Jean 9%. Todd Loewen 7%. Rebecca Schulz 6%. Leela Aheer and Rajan Sawhney further behind.’

If true, this is just sickening.

Jane 24, where are you? (funny that sounds like “Car 54 where are you? Only Boomers will get the reference, lol).

Jane24 …tune me up on Funchal, Madeira. I may need to go there over the winter months to forget the unfolding stupidity of my fellow citizens……

Can I lollygag about till the cows come home? Just slip me a Mickey Fin so I can forget the October results and the old adage that we get the government we deserve…..ugh

#98 DON on 09.21.22 at 11:28 pm

#53 handsome ned on 09.21.22 at 5:35 pm
Be thankful for small mercies. At least Justin did not sing the Sex Pistols version of God save the Queen.

*******
Or ‘We are the champions’ by Queen.

#99 DON on 09.21.22 at 11:33 pm

Thabks Ustabe

Gotcha Jag

Just saw the T bone seinfeld episode tbone.

Times are getting distrurbing on many fronts.

Hold the line folks. Thanks Nostra.

#100 al on 09.21.22 at 11:37 pm

“Why would you not do this?

You tell me.”

If at time of withdrawal, your tax rates are the same ( ie retirement) and the tax saved on the 2% yearly you’ll be exempt from at the time of withdrawal is not worth the costs and hassle to set this up and maintain. If you’re loaning six, seven figure amounts per year, sure go for it. This seems like a tax dodge for the fraction of a percent of the population.

However id love to be proved wrong. For every 10k you loan a year, if your tax bracket is 20% at time of withdrawal in 20yrs, how’s much money will one save (assuming ROI of 7% on the invested money)?

#101 kommykim on 09.22.22 at 12:08 am

RE: #73 Hola Senor Garth on 09.21.22 at 7:26 pm
Could you possibly do a blog post on what is an effective tax rate on say a stock or etf? Or point me in the direction of a past article that esplained this term.

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

Google “capital gains inclusion rate”

It works like this. Say you bought some stocks for $5000. Later you sell them for $7000. That’s a $2000 capital gain. Canada’s capital gains inclusion rate is 50% which means you only have to pay tax on half of the capital gain. (pay tax on $1000)
So, you’d pay the same amount of tax on that $1000 as if you had earned $1000 in overtime at your job. (Google “marginal tax rate”)

#102 DON on 09.22.22 at 12:22 am

#76 45north on 09.21.22 at 7:54 pm
Diamond Will Putin go down swinging? He’s moving more chips into the center of the table and will continue to do so. 300,000 reserve conscripts are conscripts with former military experience. If we look at what wikipedia has to say:
https://en.wikipedia.org/wiki/Russian_Armed_Forces

In Russia, the model is the Second World War. It’s the only model. The Wikipedia article describes the Russian Armed Forces in the scenario of Germany sending a million men to invade. It hasn’t. Putin tries to recast the present situation as the Second World War. It isn’t. He has bet his life on this recasting.

I know a man, Alex, from Russia. His two sons Roy and Jonathon are coming up to military age. Now Alex and his sons are in Canada but I suppose there are a lot of men like Alex in Russia. I wouldn’t try to put anything over on them.

****
To add I believe one can go back to 1812 the French invasion of Russia to get a sense of military strategy that worked again in WW2 against the Nazis. Recently, I read a good article about the step by step strategy that slowly wore down the opposition and it wasn’t just Mr. Winter. One strategy was to allow the enemy to make advances unopposed to undercut their efforts (booby traps…can I still use that phrase?) and stretch their supply lines, another was partisan warfare behind the enemy lines while the main Russian army kept the large force of attackers busy in a stalemate.

Never under estimate your opponent…assuming they are stupid or ill prepared doesn’t bold well. Russia is no push over and the West shouldn’t be so smug and all the ‘grown ups’ should take notice of walking gleefully into any showdown. Remember war makes some people rich and kills a lot of innocent people who just wanted to live their lives out. The talking heads will be sitting on the sidelines watching our family members battle it out for their interests. Have we learned nothing.

One things for sure the propaganda (another important strategy) is mind numbing the real truth to death but people lap it up. And China is watching that’s for sure. An opponent spread too thin (like the Romans were at one point) can be a weakness to expose. We need to get back to talking this out as that’s the only sensible idea.

If Mexico were to become hostile towards the US…what do you think the response would be.

And Soren, Twitter is being used for all types of propaganda by all types of interest groups, there have been recent studies on it.

#103 Shirl Clarts on 09.22.22 at 2:08 am

#48 Ballingsford on 09.21.22 at 5:03 pm
——–
Make it at least $15,000 if wifey is opening a TD trading account for the first time, to avoid fees.

#104 Faron on 09.22.22 at 3:29 am

#15 Søren Angst on 09.21.22 at 3:31 pm
#21 Søren Angst on 09.21.22 at 3:45 pm

Russian people, like the vast majority of humans everywhere, are good and not at all interested in being forced into an organization that routinely commits war crimes against its opposition as well as its own soldiers. Doing so while being fed almost nothing, paid almost nothing, given poor equipment etc. makes the prospect all the more appalling. The citizenry of Russia must be seeing through the lie that this is a patriotic “special military operation” and those who can are running for the hills while they are able.

#105 Pulp Faction on 09.22.22 at 4:36 am

Hey, tech genius here again…
Facebook is done for.
The new platform is kludgy and buggy as shit. It’s not going to get better.
Spiral gaining momentum.

#106 Jabel on 09.22.22 at 5:10 am

#18 ” when you’ve got money invest it.

Agreed, leave market timing to the pros. Mentioned that short term bonds just hit 4% is a mugs game. Stock like TRP, BCE, ENB pay 6% while you wait for the capital gains whereas bonds have none. TINA is still valid. Bonds are for the worry warts. Climb the wall of worry friends. Japan just attacked with a nasty intervention, that’s big news.

#107 Steven Rowlandson on 09.22.22 at 5:56 am

I suspect that the low interest rate’s real purpose is to avoid ruining the super debtors and to support borrowing and spending. It is a sign not of moral and economic health but insanity and financial sickness.
It was an opportunity for debtors to refinance and pay down debt and they largely neglected to do so. Government and the real estate market were the worst offenders. Well, they had their chance and for want of a better way of putting it they pissed it away. There will be consequences for this.

#108 Howard on 09.22.22 at 6:41 am

You didn’t mention what I feel was by far the most important part of Powell’s statement.

He said he wants real rates to be positive across the yield curve. Considering the Fed rate is 3.25% vs 8.3% inflation, there is a long way to go to bridge that gap. I presume the two will intersect somewhere around 5.5%. That’s where the Fed will pause. New paradigm.

#109 Jabel on 09.22.22 at 6:56 am

” Great time to be alive”?

You may regret that statement if the John Kerry, Marc Carney, Trudeaus of the world get their way with their Climate Lockdown proposals.

All these shadowy characters are sure of themselves. Even Bill Gates and his population reductions have found favour in WEF circles.

This is not internet conspiracy, there are pages and volumes of speaches, presentations and studies a avaiiable an easy click away. All of it published by these backroom ghouls. Google ‘ Climate Lockdown’ .

They openly admit that the Covid Lockdowns were just a trial run to and they’re ready to squash your freedoms in the name of climate hysteria. Having conquered an easy population like sheepish Canada and New Zealand has put wind in their sails

Who left the blog gate open? – Garth

#110 crowdedelevatorfartz on 09.22.22 at 8:14 am

@#97 The Jaguar
“If true, this is just sickening.”

+++
Do you really expect, thoughtful, reasoned, rational votes in the blue collar universe that exists in Wild Rose Country?

Alberta democracy at it’s most predictable.
:)

#111 Dharma Bum on 09.22.22 at 8:19 am

Hang in there blog dogs.

Based on my scientific financial algorithmic analysis, 2029 will be a BOOM year.

Keep investing.

In the meantime, ignore the noise.

Drink wine. Eat cheese. Catch a few rays.

https://www.youtube.com/watch?v=dyNnvzn9bOw

#112 crowdedelevatorfartz on 09.22.22 at 8:31 am

@#102 Don

You also have to consider corruption and fear.
Corruption that runs from the very top starting with Putin and his lackeys( this would include the military brass that have padded their Dachas with stolen loot from “phantom soldiers” on the payroll to military supplies sold on the black market).
Corruption from the richest Russian billionaire paying kickbacks to Putin and the secret police.
But who is going to tell Putin to stop?
He’s nuts.
Oil billionaires falling from windows or stabbing themselves to death has set the tone.
No one wants to be the next person to tell Vlad ..”no”.

The news media in Russia parrot the same Nationalistic anti west screed.
One national reporter mused on live tv that the Queens funeral would be a great time to nuke London….while all the leaders of the world were gathered in one place.

Absolutely over the top propaganda packaged in a slick, modern tv presentation.
Goebbels is back.

https://www.indy100.com/news/olga-skabeyeva-nuke-queens-funeral?vs=viral

These people are going to talk themselves into believing a “limited” nuclear war is winnable.
All to save “mother Russia’s” wounded ego..
Inferiority complex with nukes.

#113 IHCTD9 on 09.22.22 at 9:10 am

We’re now irrevocably doomed to anchor dragging debt servicing costs (climbing both in qty and interest rate), and major industrial hampering and investment losses. Fixing this will require Canadians to develop an incandescent zeal for fiscally Conservative government for 2+ decades. We’ll need to pine for austerity measures and service cuts (might as well, they’re coming either way).

Going the same way we are now will just continue to make Asset owning Boomers and Gen X’ers even richer than they have already been made, while putting newcomers and youth into permanent serfdom.

#114 James on 09.22.22 at 9:29 am

Hey Garth, ever think of getting back into newsprint?

Wow, things are changing – 9 Postmedia papers now being shut down for Monday print editions.

https://www.thestar.com/news/canada/2022/09/21/postmedia-to-stop-monday-print-edition-of-nine-major-dailies.html?li_source=LI&li_medium=thestar_recommended_for_you

And a new essential service, a roller skating rink, is being created at the underused Ottawa Citizen building. Only costs $17 a skate, cheaper than a subscription.

https://ottawa.ctvnews.ca/roller-skating-is-coming-back-to-ottawa-in-a-big-way-1.6078279

Thank goodness we have your blog, where we can read the real news provided here by TurnerNation!

#115 crowdedelevatorfartz on 09.22.22 at 10:26 am

“Fat Leonard” has been captured…..

https://www.reuters.com/world/americas/venezuela-arrests-fat-leonard-contractor-us-navy-bribery-case-2022-09-22/

#116 crowdedelevatorfartz on 09.22.22 at 10:46 am

Gee.
Schools have apparently ignored the
Trades to their detriment of the greater good.

https://www.msn.com/en-ca/money/topstories/chris-selley-we-re-not-even-close-to-ready-for-the-population-growth-we-re-getting/ar-AA127po8?cvid=a35b6e204ef2413ca0f98d19e4dda34f

When they start talking about cloning plumbers and carpenters…..
You know we’re screwed.

#117 Jabel on 09.22.22 at 11:00 am

DELETED (WEF conspiracy nut)

#118 Faron on 09.22.22 at 12:22 pm

Batten down, Nova Scotia. She’ll be extratropical, but still very potent and WET. Prepare now if you are in NE NS.

https://weather.gc.ca/warnings/report_e.html?ns19#125024144800956284202209220508ww3x4xcwhx

Also, potential monster on it’s way to the Gulf of Mexico for late next week.

The Atlantic season is going out like a lion.

#119 to the doom junkies on 09.22.22 at 12:25 pm

@#19 Gerald on 09.21.22 at 3:43 pm
Garth, it really looks like we are heading for a calamity of some kind in the short/medium term.

Nouriel Roubini has articulated this very well just this week.

He predicted the 2008 crash correctly. In 2021, he predicted a recession in late 2022.

even a broken clock is right twice a day

#120 Faron on 09.22.22 at 12:52 pm

Broken record here, but listen to this man speak about the last 40 years of monetary, the impacts of declining rates and fed actions, the rise of populism and how that all is adding to the ongoing inflation we are living through. I think a lot of you in steerage will agree with some or all of his views and be intellectually challenged.

https://youtu.be/DzOBxguoUes

#121 Dragonfly58 on 09.22.22 at 1:08 pm

I was briefly a HS trades teacher. 1989 – 90 school year. Old equipment mostly dating back to when the school was built , mid 1960’s. A lot of it in quite poor condition, a segment of the students are very hard on tools. Breaking things seems to have a certain entertainment value.
And a truly pathetic yearly expense budget.
All in all a frustrating situation. The students that could have put my time to good use got little of it. Too busy dealing with the jackasses who should not have been enrolled in the class in the first place.
That one year was more than enough. I had a lot invested in my teaching degree, but going back to my old employer was a no brainer.
Post secondary is a better bet for many young people.
HS shop used to be a good start decades ago. But far too many young people are just not ready for taking their future seriously in the High School years. Phones and social life seem to dominate.

#122 PBrasseur on 09.22.22 at 1:54 pm

Poor productivity in the presence of stimulus-credit is the reason we get inflation.

This is nothing new, however in the past much of our poor productivity was compensated by an explosion of productivity in China and other emerging nations.

Those days are rapidly coming to an end (you know that if you’ve been following events in China), no longer will we be able to count on ever cheaper imports to relieve inflationary pressures. Not only that but rapid population ageing in the west , along with big spending, consumers of manpower, always bigger governments will make productivity gains ever more difficult.

So, in the short term at least, no hope to count on productivity gains to help maintain and standard of living.

Stimulus won’t be much help either because the supply side can’t keep up therefore more spending will inevitably lead to inflation.

Also remember that the exponential wealth effect of leverage gains works just as well in reverse!

So there you go, you decide if this is a great time to live… I suspect that won’t be the case for a great many, especially if you’re old and reliant on a small pension. At least try to stay healthy as our health care system are going to s***ts. Good luck to all.

#123 Squire on 09.22.22 at 2:57 pm

Oh look, it’s our aspiring to be PM Carney

https://www.ft.com/content/0affebaa-c62a-49d1-9b44-b9d27f0b5600

#124 Bdwy on 09.22.22 at 3:36 pm

Costco report imminent. Just doubled up position.

Still time to get in.

Gruesome market so probably sell tomorrow.

#125 crowdedelevatorfartz on 09.22.22 at 3:37 pm

@#121 Dragonfly58
“HS shop used to be a good start decades ago. But far too many young people are just not ready for taking their future seriously in the High School years. Phones and social life seem to dominate.”

+++
True enough.
And yet when they become accountants and such…they constantly bee-yatch and moan about what a highly skilled plumber makes.

#126 crowdedelevatorfartz on 09.22.22 at 3:40 pm

@#120 Faron.

Sorry.
I bailed out in the first 45 seconds before the “bitcoin” ad was finished……

#127 Diamond Dog on 09.22.22 at 5:02 pm

#72 Hal on 09.21.22 at 7:12 pm

Gold is going to 5,000 Canadian dollars an ounce by 2025 to 2026 the latest as inflation is still in the beginning stages.

Bullion has been a disaster and will continue as long as the US$ is strong. Don’t throw your money away on rocks. – Garth

Yeah, the dollar is against it certainly over the next 5 or 6 months and the dollar is likely to stay resilient for most if not all of 2023. High inflation should start to abate by next summer and be out the door in 2024 in theory “if” the Fed holds true to +4% rates.

Gold’s use as a commodity (I will remind, it is a commodity) is also 78% jewelry which is a luxury item. Luxury just doesn’t do that well during global recessions or perhaps recessions more specifically in Europe. At least, that’s what I see when I look at the gold history chart below:

https://goldprice.org/gold-price-history.html

I wouldn’t want to take that bet on gold where Europe is in 2025, 2026, at least right now and if I was bottom fishing, I’d certainly wait.

The problem with gold I’ve found is it’s far from the only game in town. Compare it with base metals for example and base has shown much greater opportunity with peaks and troughs and risk as well, that’s all part of it but when one compares gold to other commodities at least rear view mirror, old man gold is or has been a laggard for a while now.

That’s all I see gold as IS a commodity btw. Currency arguments and abstract uses for gold are all they are. There are some big reasons why we went off the gold standard 50 years ago. If paper goes down, we’ve (whoever’s left) got much bigger problems than “where’s the next opportunity” and what the next currency gold rush will be.

#128 Tony on 09.23.22 at 5:15 pm

If biblical prophesy is deciphered correctly Putin will take one quarter of the Earth in his ongoing war. Baba Vanga also predicts great things for Putin and Russia. Myself I see terrible things in the future for Zelensky and nothing but good things in the future for Putin.