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By Guest Blogger Doug Rowat
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What the market needs this year is weak corporate earnings.
Needless to say, an unexpected statement from a portfolio manager who has frequently gone on the record to highlight the high correlation between market direction and corporate profit growth.
However, this year may, in fact, be different. The S&P 500’s Q4 earnings results, which wrapped up at end-February, were unimpressive (roughly a 6% y-o-y earnings decline), but the market reacted inversely with the S&P 500 gaining about 4.5% through the first two months of the year.
Why? Because with an equity market obsessed by inflation, 2023 is shaping up to be a year disruptive to traditional data relationships. Good market data is being perceived negatively (inflation inducing), while bad market data is being perceived positively (the economy’s cooling). Simply put, bad market data signals that central banks are winning the battle against inflation.
And so far, slowly but surely, that battle’s being won. If US headline CPI continues to moderate, as it’s done for eight consecutive months now, then markets will likely advance. In fact, this week’s positive February CPI results (a 6.0% y-o-y increase in prices, down from January’s 6.4% y-o-y increase) were influential enough that they managed to halt the downtrend caused by the US regional-bank crisis with the S&P 500 trading up almost 2% on the news.
Turning the corner: US headline CPI (y/y%)
Source: US Department of Labor; Turner Investments
So what does slower or even negative profit growth signal to the market? It signals a potential slowdown of the US labour market. It’s the strength of the jobs market that has been the biggest thorn in the side of the US Federal Reserve in recent months. The US unemployment rate remains at a 50-year low. It’s hard to control inflation when you have a fully employed (and hence free-spending) consumer.
As the US economy roared back from the pandemic lockdowns of 2020, US non-farm payrolls (a monthly measure of new jobs created) were frequently in excess of 600,000 per month throughout 2021. This was good, as we needed a post-Covid jobs recovery, but when the Ukraine war broke out, a much more serious inflation problem developed. At this point, weaker jobs numbers were desirable.
Beginning in summer 2022, an encouraging trend emerged as the US recorded five consecutive months of steadily moderating jobs growth—monthly non-farm payrolls drifted from a high of almost 570,000 to less than 240,000 by year-end. Unfortunately, the trend so far this year has been less than favourable with the US posting monster non-farm payroll results for January and February, both well in excess of economist expectations.
So how do you ultimately achieve slower job growth? It starts with corporate profitability. If companies are making less, they’ll lay off workers. This has begun in the tech sector, of course, which has recorded some of the steepest earnings declines of any sector in recent quarters. Just this past week, for example, Meta announced that it was laying off another 10,000 workers—on top of the 13,000 it laid off in November.
Standard Chartered Bank tracks layoffs in the tech sector. Layoffs have, naturally, spiked; however, it’s the non-tech sector that needs to catch up:
Information technology monthly layoffs (000s) vs non-information technology layoffs (000s)
Source: Standard Chartered Research, 3-month moving average
Normally, no investor wants an earnings recession, but this is 2023, and earnings weakness—because of its implied relationship to a cooling of the labour market—may be welcomed by investors. And an earnings recession appears inevitable at this point as consensus expects a 9% y-o-y earnings decline in Q1 followed by another 7% decline in Q2. Earnings growth is poised to rebound in the second half however:
US quarterly earnings (green column) & revenue (orange column) growth (y/y)
Source: Zacks Investment Research
It’ll no doubt require a delicate unfolding of events, but if an earnings decline over the next few quarters has the knock-on effect of slowing the labour market and if earnings then bounce back in the second half, a positive overall year for equity markets remains a likelihood.
I didn’t think I’d be in a position to question my assumptions regarding the positive correlation between corporate earnings and equity-market direction, but in the past year, up is down and down is up. As Wharton School professor Adam Grant highlights in his book, Think Again, sometimes it’s necessary to question old assumptions.
It’s a hard thing to do and in Grant’s words “it requires us to admit that the facts may have changed, that what was once right may now be wrong.” Such admissions are tough as the old views are comforting.
But the facts have changed. And, for this year at least, it’s my view that weak earnings will—counterintuitively—drive equity markets higher.
$ $ $
Finally, do bloggers like myself read other bloggers? You bet. And I came across this insight recently from Barry Ritholtz, who was, ironically, himself referencing a fellow blogger. It’s not earth-shattering wisdom, but it’s wisdom worth being reminded of:
As [Michael] Batnick points out, all of these horrendous periods of market pain are already factored into long-term returns of equities. Meaning you do not get the 8-10% long-term gains without living through a significant number of market events, ranging from cyclical drawdowns to longer secular bear markets, and full-on crashes. It is all part of the dynamics of risk markets that by definition go up and down.
To state the obvious: “If you want to be there for the good times, you must also suffer through the bad times.” It is a too often forgotten cliché.
Is it cliché to repeat someone else’s cliché? Perhaps, but Ritholtz’s cliché is a good one, so don’t forget it.
Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Investment Advisor, Private Client Group, Raymond James Ltd.
80 comments ↓
Use of this weblog is contraindicated to BTC and Gold.
The Bitcoin Bros. and the Gold Nuts are correct only every few years. Now is their time to shine.
Some messy happenings in Financial and Oil sectors.
IMHO..tech jobs are the human equivalent of cryptocurrency.
If Counterintuitive means the portfolio is uppa uppa uppa….I’m in.
…“it requires us to admit that the facts may have changed, that what was once right may now be wrong.” Grant/DR +++
Wonder if Mr. Market will take that advice given Powell will raise .25% next week. He’s not going to make the same mistake Volker made when he backed off and cut and then had to aggressively raise again. We’re still in uncharted waters everywhere you look…imho
@#124 Jane24
“You have told us on this blog that you are wealthy. Why did you leave your parents as wards of the state, and not upgrade? ”
++++
Kitchen renos are horrendously expensive……
I told people to sell property during the pandemic and pour the money into US dollar safe HISA type investments.
Now I am telling you to re-invest those accumulations.
Take 10% of what you have allocated for the higher risk end of your portfolio and invest that amount for the next 10 months.
I know everyone tells you that you cannot time markets (it is an impossible undertaking etc. etc.). I am just informing you on how to do the impossible.
Ritholtz Wealth’s tidbits/nuggets are even better when viewed on their YouTube channel. When is Turner Investments getting one?
I saw in the window of a major U.S retailer a sign that read…
Due to a national coin shortage exact change would be appreciated.
Maybe it’s because they sent all their shrapnel to Ukraine…
M48CA
That is an interesting interpretation, but seems to defy logic. If the war is causing inflation, how would more unemployed people reduce inflation allegedly caused by the war expenditure?
Would we then not end up with stagflation?
Inflation is a result of reckless monetary policy and the casinos/oops I meant stock exchanges have been distorted by what is known as the Greenspan Put, which is finally recognized by Powell and has been and done away with it.
So far I’ve avoided drawing down on any investments during the downturn. I can probably hold out until the end of the year to draw any income from my investments.
Here’s hoping this thing turns around this year.
Thanks Doug, good insights!
Regarding historical long term return of equities- an investor can quite handily exceed the average by holding good companies, never* selling, and preferentially adding at slumps.
*never, as in just don’t do it…you know, unless and depending
So… right now, it is significant that many good companies and markets are at the same level as 2021. Compressed springs=potential energy. The release trigger is a drop in interest.
My companies are going gangbusters as govt $ is flowing to our specialty areas, so we’ve hired +25-ish%. Hopefully others are earning less so the spring releases.
:-)
Counterintuitive indeed Doug. Investing should be a long term venture. IMO, too many DIY investors are looking for the quick gain.
The COVID after effects are still swirling around. Hard to remember what “normal” ever looked like. What is going to be the “new” neutral rate for central banks? Or are we in a perpetual hiking / lowering environment? Markets like stability and that seems unlikely to happen anytime soon…
Forget about Amazon deliveries kids…..
Zipline to your door in minutes.
https://www.youtube.com/watch?v=DOWDNBu9DkU
There you have it. Sail Away finally posts something truthful.
Wishing for negative interest rates , just like the debt junkies praying for a return to 1.99% variable mortgage rates.
The central bankers do not seem to acquiesce though.
Doug, I’m not so sure that a fully employed consumer is going to spend wads of cash. First, things cost a lot more so many people are already being cautious with spending – especially if they have any reason to believe their employment is as risk. Those in the tech industry for instance may not feel very secure just now. As for inflation moderating, it may well be doing overall, but food in particular is not shaping up to drop in price any time soon. The steady stream of environmental impacts upon the agricultural sector from drought, flooding, sudden dramatic temperature shifts etc. are almost certainly going to translate into higher prices at the grocery store checkout. So a car may drop in price, but many people make do with the vehicle they already have or rely on public transportation. So that drop in the price of a vehicle doesn’t really matter whereas the cost of food does. People tend to spend based on their perception of whether they can afford to. So quite possibly fully employed folks are keeping their wallets closed because they don’t believe it is safe to spend.
#9 Quintilian on 03.18.23 at 12:00 pm
Inflation is a result of reckless monetary policy and the casinos/oops I meant stock exchanges have been distorted by what is known as the Greenspan Put…
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A global pandemic and the largest European conflict since World War II have no role?
And casinos are places where the players always lose in the long term. If you’re losing long term in the stock market then you’re simply not doing it right.
—Doug
“Sign Not in Use” Image is great. Should put a bunch of those signs around the parliament buildings in Ottawa. Everything the federal government has done in the last 8 years has been ‘Counter intuitive’.
On the market side looks like its going to just chop and down in the current range (ie for USA S&P between 3600-4200) for the next few years. Of course Canadian indexes will do the same, or worse if energy prices drop and bank fears persist.
When people quote the number of jobs in the U.S. do they
take into consider all the people working all over the
U.S. that are illegals working for cash cash no receipt
especially in the western states.
10 Goldenboy
“So far I’ve avoided drawing down on any investments during the downturn. I can probably hold out until the end of the year to draw any income from my investments.”
——————————————————
Why would you draw down? My dividends keep coming, interest from fixed-income continues, REIT still pays, as does my rental, all regardless of these ups and downs in the market. Much tax-preferred or tax-free from the TFSAs. If you dont require the income just now, DRIP it all to take advantage of the volatility. More for later.
I’m letting the growth assets ride until they are out of
balance. If you’ve held them for years, you are probably still in the green when you look at the net$ you’ve invested.
Watch the tax on any cap gains, and the gross-up on the dividends.
All standard stuff.
And meet with an advisor if you are not comfortable with doing it yourself.
There’s no way at all that global inflation is being caused by many influential countries having similar strategies dealing with COVID and printing money at new record levels to inflate away their record debt levels either…. I must be paranoid. So let me get this straight, we need more Canadians to lose their jobs and livelihoods in order for inflation to go down rather than the governments of the g7 to actually focus on their constituents and stop creating fiat money and focus on fiscal responsibility.
#16 Linda on 03.18.23 at 12:23 pm
As for inflation moderating, it may well be doing overall, but food in particular is not shaping up to drop in price any time soon. The steady stream of environmental impacts upon the agricultural sector from drought, flooding, sudden dramatic temperature shifts etc. are almost certainly going to translate into higher prices at the grocery store checkout.
—-
Food inflation has nothing to do with climate change otherwise we would have had 10% y-o-y food inflation for years now and your dozen eggs would equal a mortgage payment. Recent (and temporary) factors are at play here.
—Doug
#115 Indigirl on 03.17.23 at 10:21 pm
QUOTE:
“….And executors are not liable for years. Collect the assets. Pay the debts. Get a clearance certificate from CRA. Then distribute. Not liable for a dime. A good lawyer sets you on the right course….”
COMMENT:
CRA clearance is a major step.
Yes…100% agree with the rest
===
Executors can be personally liable for an estate’s debt, also for the monetary and legal repercussions of any mistake made during the process. – Garth
===============================
COMMENT:
Hi Garth:
True…
In my case as sole Executor..
……my sibling was the only other beneficiary…she had a lawyer…as I did.
Once the Clearance certificate from CRA is provided…the beneficiaries can review the matter
and either sign off or not.
In my case they did sign off.
The onus would be on BOTH lawyers to cover all bases, would it not ?
Any screw ups is their fault..or why have a lawyer.
This was back in 2018.
As Executor…I could “weaponize” this via claiming Executor fees..which I submitted I wouldn’t.
An Executor should never shy away from using a “hammer” if necessary…especially if they are dealing with clowns….this is business …..not diplomacy.
Unless mistaken..the matter is permanently closed, moreso as Statute of Limitations would kick in, would it not?
Thanks…
Alois
To build on the excellent post “#16 Linda” ,in this particular moment in time higher employment is driven by the run-up inflation in the cost of the base of the Maslow pyramid: Food ,Shelter, Utilities ,Transportation and it is a result of inflation to simply attemopt to keep up the same standard of living and will not lead to increase demand.
Reminds me of a long time ago when I was working for a mulitnational and all off the executives were outraged at budget time that a 5% increase in the sales budget was leading to a 20%increase in operations cost. Their little MBA brains couldn’t comprehend the $ vs unit math ,e.g if the ACU (average cost per unit) goes down you will need to move a lot more of units for same dollars ,so more people ,more space ,more trucks.
Same here ,the highly educated but street dumb (or removed from reality if you wish to be polite) economists are failing (or refusing)/ to..see that the increase in employment is driven by desperation to keep up with the same or lower “unit consumption” and not an increase in demand of more units ( food ,Litres of gasoline ,rental units ..)
That was well worth the read. This is why I come to this blog religiously. Thank you Doug
DELETED (Anti-vaccine)
The problem with this analysis is that it assumes things are similar to the way things might have been 20+ years ago, when competence played at least some part of the decision making regarding hiring people for top positions.
These estimates and models need to be adjusted for the current political climate of having complete idiaiots running things.
Here’s a good one regarding the SVB Bank failure. Others have mentioned that there were more red flags up on this one than a CCP convention;
–Wokeness has replaced competence and merit across the banking sector, and San Francisco Fed Chief Mary Daly is the poster child of this pernicious trend.
A protege of Treasury Secretary Janet Yellen and short-list candidate for Federal Reserve vice chair, Daly was supposed to be supervising Silicon Valley Bank but apparently was too busy playing politics and pushing woke agendas to regulate rogue banks like SVB, the second-biggest bank failure on record.
Daly had other priorities, including climate change, George Floyd and Black Lives Matter, inequities between blacks and whites, LGBTQ+ rights and a host of other woke social-justice issues that had nothing to do with banking and finance.
Daly’s Fed bio gushes she’s committed to “understanding the economic and financial risks of climate change and inequities.” Never mind the more existential threat of banks in her jurisdiction amassing mortgage bonds with longer maturities that exposed investors to greater interest-rate risk.
Silicon Valley Bank collapsed rapidly within 48 hours. REUTERS
In a recent LinkedIn post, Daly appeared sidetracked by racial justice, writing: “What Black voices have I lifted up? Equity & inclusion begins with me. #GeorgeFloyd.” She also posted selfies with local Black Lives Matter activists….
And it goes on….
Is there a point in the economic cycle where people get tired of the drop in living standards to the point where they aren’t focused on virtue signaling and reducing living standards?
Canada’s ruling class is all-in on the same agenda. Will there be a turn-around?
#14 crowdedelevatorfartz on 03.18.23 at 12:10 pm
Forget about Amazon deliveries kids…..
Zipline to your door in minutes.
==================
COMMENT:
Tech is fascinating…
…..but IMHO it won’t go far in modern countries.
Equivalent of self driving car….pipe dream that has far more cons than pros.
Yes, the volatility in markets has been in the news lately. What to do? Did I hear some guy named Mr. Buffett say a buying opportunity?
Sign today reminds me of a funny story from a friend of mine who worked in the marine industry on weather ships
and freighters etc. While he got a job at the government
dockyards in Victoria B.C. He found the work a little less demanding but you did have to get your work done and implied at a slower pace. He said the sign on the road
said it all SLOW MEN WORKING.
Interesting article. Food for thought.
Article about the Death of Cryptocurrency, academic but quite readable.
Recommended by the always-worth-reading, John Naughton.
#19 “When people quote the number of jobs in the U.S. do they take into consider all the people working all over the U.S. that are illegals working for cash cash no receipt especially in the western states.”
—————————————————————-
Picking cukes and tomatoes?
” … you must also suffer through the bad times.”
Back up the truck. Oh the pain, the pain.
#27 AM in MN on 03.18.23 at 2:50 pm
The problem with this analysis is that it assumes things are similar to the way things might have been 20+ years ago, when competence played at least some part of the decision making regarding hiring people for top positions.
These estimates and models need to be adjusted for the current political climate of having complete idiaiots running things.
====================
COMMENT:
Excellent post…
I’m gonna reflect and comment more later.
#2 Alois on 03.18.23 at 11:10 am
IMHO..tech jobs are the human equivalent of cryptocurrency.
—
Just FYI, wordpress, cloudflare, the LAMP stack and the umpteen bajillion other bits of software and hardware that made your comment possible today were built by humans with highly skilled jobs. Suggest you rethink that analogy.
Also, crypto isn’t useful nor does it have value.
“50% of all insolvencies in 2022 were millennials….”
https://vancouversun.com/moneywise/canadian-millennials-are-drowning-in-debt-four-tips-to-help/wcm/7a3b7aed-20fe-4646-9685-0ab79262e524
Shocking.
Is there any way we can spin this to make it Boomers fault?
Problem is, we now have a good old fashioned banking panic, same as 150 years ago, moves faster now. Creates its own crisis. Just remember what Jimmy Stewart said.
It looks like the SVB bailout is going to be more like $600 billion, not $15 billion, because SVB is only the beginning. A lot of the banks (all, perhaps) have treasuries that are underwater. There is never just one mouse.
What will it mean for inflation? Probably not much right away. It’s looking like the 2008 bailouts all over again, only this time without the fanfare, or even congressional oversight. The Fed is loaning banks against the nominal value of their bonds, despite the market value having plummeted. You can look at this two ways; either the Fed is just printing money to loan the banks, or the interest rate really isn’t 5% it is closer to 1% for select borrowers (banks).
Either way it is inflationary. The question is, is it inflationary enough to overcome the deflationary factors afoot? I see oil is down to $66/bbl, which is kind of reassuring but also counterintuitive with Russian oil still under sanctions. It’s actually getting to the point where the “price caps” are mute. So what’s going on there? How much has oil demand dropped? Why? Where? Who is doing without and how are they getting along?
Gold is knocking on $2000/ounce (USD), so not exactly reassuring from an inflation point of view.
It is easy to overreact, because it feels like something has changed. But yet we’ve been here before and in retrospect nothing ever did.
So if nothing has changed, expect more money coming into the system at 1%, only this time not for you, and inflation to remain stubbornly high. The money has to go somewhere. It gets averaged out in prices.
And buy all the things. You may not have to worry about your bank collapsing, but you are still only getting 0.5% on your deposits, whilst inflation is north of 6%, on selected items only.
lots of information, i simply short canada and are making money
#35 Faron on 03.18.23 at 5:25 pm
Suggest you rethink that analogy.
================================
COMMENT:
Rather than your typical ,condescending , tunnel- vision kneejerk judgementalism…
I am implying that tech workers ….at this juncture….. have likely served their actual planned purpose which was to create this AI world ,(where humans are increasingly deemed liabilities versus assets) ,…a world which is clearly imploding on itself.
The Dot.Com bomb in 2000’s was an early warning.
In hindsight….
…..Was it all worth it?
…….. and what will be the final cost ?
Doug himself unwittingly putting on a master class in cognitive bias.
Nobody wants to think that future market direction will be negative, especially when you are in the investment industry and this is the means by which you put your daily bread on the table, and in your pocket. So you seek and support theories that purport to rationalize your perspective and your hopes.
Bravo! Well done, professor.
#1 TurnerNation on 03.18.23 at 11:06 am
Some messy happenings in Financial and Oil sectors.
———
AKA Canaduh, or as you would say, Kanaduh!
Was Silicon Valley Bank’s collapse triggered by a NEWSLETTER? Well-regarded tech expert’s mailer first flagged bank’s 185:1 debt-to-equity ratio in February, spooking VCs who follow him avidly
https://www.dailymail.co.uk/news/article-11855685/amp/Silicon-Valley-Bank-185-1-debt-equity-ratio-flagged-February-tech-experts-newsletter.html
We have yet to see all te cutbacks and roll backs coming.
There will be tremendous labour unrest and many families across Canada will be down to one earner or less. It is not a bright future. The amount of debt in Canada will continue expanding. Austerity won’t work. Saying no more is the only thing that works. People will be really careful how they spend their money. They will look carefully at the length of life they have left and start pulling cash out of everything early. No point in having it buried in walls or accounts if you and your family need it now or very soon.
When money managers hope for weaker labor market, socialists say capitalists are perverted.
#27 AM in MN on 03.18.23 at 2:50 pm
The problem with this analysis is that it assumes things are similar to the way things might have been 20+ years ago, when competence played at least some part of the decision making regarding hiring people for top positions.
These estimates and models need to be adjusted for the current political climate of having complete idiaiots running things.
Here’s a good one regarding the SVB Bank failure. Others have mentioned that there were more red flags up on this one than a CCP convention;
–Wokeness has replaced competence and merit across the banking sector, and San Francisco Fed Chief Mary Daly is the poster child of this pernicious trend.
etc. etc.
================================
COMMENT:
IMHO…
What we are observing is what appears to be economic guerrilla warfare which appears to be random events like SVB, FTX etc…. but ultimately actually co-ordinated on a far larger scale.
In essence..we are seeing COMMUNISM unfold …via classic Cultural Marxism tactic.
We have olde school Top Notch classic advisers like Garth, Doug and Co…the Newbie Generation/s…. and those of us stuck in between.
Here in B.C….
…one of my bigger concerns was UNDRIP…..a rather dirty trick by the UN. Our gov’ts are stabbing us in the back with deference to “First Nations”, effectively agreeing that FN’s never ceded “the land”, therefore non FN B.C. citizens are “trespassing”.
How does this manifest itself ?
As I had suspected….
Private Firms are now cutting deals with FN to do joint ventures such as resource extraction, hence they bypass normal Gov’t approval channels.
Further to this…the FN would likely reap/keep the benefits and the rest of BC citizenry excluded.
Further to this…environmental protections etc. may no longer apply either.
This is, effectively… a slow motion train wreck…but regardless…the end result is STILL a train wreck.
#2 Alois on 03.18.23 at 11:10 am
IMHO..tech jobs are the human equivalent of cryptocurrency.
—
From the internet … of things!
“Alois could mean “all wise” or “very wise” ”
As they say … there are exceptions to every fool.
I’m finally resigned to the fact that a modest sized investment in gold mine ETF’s when they are out of style/cheap, can predictably be flipped every time there is a decently sized black swan flying by.
Pretty easy to pick up 10% in that sector, sometime within a year, if bought right.
Usually the flip window is very brief, it would be easy to miss the top being either early/shy, or greedy/late, but there is fast food to gorf down there!
28 Alois:
Current “full stack” version of Tesla’s FSD is impressive. Many real time videos of driving through cities, city to city etc with no / minimal interventions. The new Giga Mexico plant ( breaking ground in April ), is dedicated essentially for a high volume ( 1 million plus/yr) of the $25,000 compact car, ($17,500 after IRA tax credit). Most of these may never be sold to the public, but Tesla may keep and operate a Transportation as RoboTaxis fleet. Production from Giga Mexico is expected to start mid 2024, and be fully ramped by mid 2025. Rumors have it a parallel plant, similar size, will be announced shortly for Indonesia .
Ya, ya there Oil Oracle…my stock prices are getting hammered like I am sure everyone else’s are. In it for the dividends and thank God they are still robust; otherwise it would be ugly, very ugly.
If the darned American’s would get there Regional Bank liquidity under control and lay the boots to their crud Regional Bank Upper Management like Biden said this Mr. Market at present would look a whole lot different, e.g., Republic Bank and Lord knows who else.
What kills me is the Americans are still harping on Credit Suisse and a potential UBS merger and $6 billion in loan guarantees which is PEANUTS.
Misery indeed does love company is all I will say.
———
Canada, if you’re coming to Europa thinking you have a hotel and flight to/from Canada booked, peachy cool magneto … think again. Book ahead even basic transportation. In Madrid, today hopped to Oporto today and in light of what I have seen here and in Italia this word best describes the “I Turisti” situation:
INSANITY.
For example the other day went to Toledo and lucky I got a train back to Madrid. Trains every 20 min to Madrid booked solid until late evening.
So think it thru Canada. Plane full to Oporto today, more Turisti at Madrid airport than you can shake a stick at.
In my 8 years in Europa I have never seen anything like this. Blame post COVID Captivity and humanity looking to cut loose.
LEAVE.NOTHING.TO.CHANCE.
PS:
The Port wine today, buonissimo. Tomorrow Lisbon.
Given the magnitude of the costs of living I seriously doubt people can afford the luxury of bad times. What they need is not booms and busts but continuity of sufficient earnings.
#41 Grasshopper on 03.18.23 at 5:56 pm
Doug himself unwittingly putting on a master class in cognitive bias.
Nobody wants to think that future market direction will be negative, especially when you are in the investment industry and this is the means by which you put your daily bread on the table, and in your pocket.
—-
Last year, earnings were actually positive, but equities declined. Long-running correlations often break down and I’m pointing out that it may happen this year. But it’s far from a certainty.
And if I thought negative equity-market outcomes didn’t occur I wouldn’t endorse (and place all of my clients) in balanced portfolios.
—Doug
I dont see why all the worry? If you hold a bunch of securities that are spitting out regular dividends then just sit back and let the DRIP do its job.
I know you tried to explain today, Doug, what amounts to Mr. Market insanity but you know it’s still this:
Lipstick on a couchon.
The CDN Banks getting hammered, boggles my mind
https://www.google.com/finance/quote/BNS:TSE?comparison=TSE%3ATD%2CTSE%3ACM%2CTSE%3ARY%2CTSE%3ABMO&window=1Y
CDN oil getting hammered, save Cenovus, ibid on the boggle:
https://www.google.com/finance/quote/ENB:TSE?comparison=TSE%3ATRP%2CTSE%3ASU%2CTSE%3APPL%2CTSE%3ACVE&window=1Y
I sit here and just shake my head in bewilderment. WTF???
Speaking of getting hammered, off to get me one of those 2-3 shot Spanish €15 Negroni’s.
Sorrow. Drown.
StatCan The Daily …
Canada’s international transactions in securities, January 2023
Canadian investors reduced their holdings of foreign securities by $16.2 billion in January, the largest divestment since March 2022. Meanwhile, non-residents* acquired $4.2 billion of Canadian securities in January 2023, down considerably from a $21.2 billion investment in December 2022.
——-
* Hey, that was me lending in part (as in pittance) a helping hand to the country I love, ya, that’s you Canada. Down but not out … yet.
Yellen re bank bailouts.
Sound like the criteria has changed.
https://twitter.com/SeidlerCorp/status/1636518949872451584?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1636518949872451584%7Ctwgr%5E8ec016b668b076d91caa0656eeae8c20a8d00829%7Ctwcon%5Es1_c10&ref_url=http%3A%2F%2Ftheeconomiccollapseblog.com%2Fjanet-yellen-just-poured-lighter-fluid-on-every-small-bank-in-america%2F
Garth this saturday girls speil much improved on last saturday girls ‘church lady’ on work ethic.
#27 AM in MN on 03.18.23 at 2:50 pm
This rapidly congealing (like rendered lard tossed into a February Toronto slushpuddle) trope that SVB failed “’cause woke” is complete, manufactured garbage. I guarantee you that the various wokesters spent almost no time on those issues.
Last Salvo Turista Tip Espagna
Across the street from Museo Nacional del Prado, Madrid, Pl. Plateria …
Huge yummy entrecôte, basket of bread, bowl of tasty green olives, rather large goblet of Spanish red X2, machiatto = €23.60.
Guy gives me the bill looking guilty … I threw €25 at him and ran like hell thinking he made a mistake.
Fellow Italian (Perugia) this AM early remarked beer cheaper in Spain than in Italia … in fact, cheaper than bottled water.
Cut loose Canada fellow Investors, drown your sorrows in Europa. That’s what I’m doing.
#54 Dolce Vita on 03.18.23 at 7:37 pm
I know you tried to explain today, Doug, what amounts to Mr. Market insanity but you know it’s still this:
Lipstick on a couchon.
The CDN Banks getting hammered, boggles my mind
https://www.google.com/finance/quote/BNS:TSE?comparison=TSE%3ATD%2CTSE%3ACM%2CTSE%3ARY%2CTSE%3ABMO&window=1Y
CDN oil getting hammered, save Cenovus, ibid on the boggle:
https://www.google.com/finance/quote/ENB:TSE?comparison=TSE%3ATRP%2CTSE%3ASU%2CTSE%3APPL%2CTSE%3ACVE&window=1Y
I sit here and just shake my head in bewilderment. WTF???
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Shaking my head too…..Possibly some of the big boys dumping stocks and jumping into bonds….bargoon time for BNS and ENB stocks. I hold both and am adding more at these prices. 6-7% tax advantaged divvy and a capital gain when the market reverts to normal. Back up the truck.
#56 DOWn
Geez, thanks for the reassuring words Janet.
Regional Bank Foot. Shoot.
Hello, my Fruit and Vegetables, Nuts.
When I visited Monterey, I was advised by my old blog buddy Washed Up Lawyer, to read some John Steinbeck, then I had to remind him that I do my daily reading quota by reading this very blog.
A day before we arrived in California, the local area got approximately 25mm of rain, it’s been dry since we’ve been here, but I’ve seen a few news stories about how the amount of rain this winter is doing good things for reducing the drought conditions, the link shows the dramatic turnaround since last September, hopefully that allows the crops to flourish.
It’s meant to rain tomorrow, the local council is probably happy, as it will cleanse downtown of all the St Patrick’s Day induced sidewalk vomit…
M48CA
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“California’s Central Valley is often referred to as America’s Breadbasket, famously depicted in John Steinbeck’s Grapes of Wrath. Nearly 50% of U.S.-grown fruits, nuts, and vegetables are produced in California, in farms located in the Central Valley.”
https://www.sfgate.com/bayarea/article/drought-monitor-map-shows-water-gains-california-17843965.php
https://www.cbc.ca/news/canada/first-person-degree-was-worthless-in-canada-1.6772923
“Canadian experience” – WTF is that? Canada thinks too highly of itself.
@#62 Floppie
Wow!
Huge difference in the drought map.
Looks good.
Hopefully they don’t get the “Great Central valley Flood of 1862”
https://en.wikipedia.org/wiki/Great_Flood_of_1862
Another grasshopper?
DELETED
“If you want to be there for the good times, you must also suffer through the bad times.”
Sorry DOUG……..Both Warren and I disagree.
“The stock market is a no-called-strike game. You don’t have to swing at everything – you can wait for your pitch.”
— Warren Buffett
#10 Dolce Vita on 03.16.23 at 1:05 pm
I liked it that SNB ready to give Credit Suisse 50M Francs if they need it.
Europa’s way of letting IQ 51-70 American put option investors know they will get a very bloody nose. Very bloody. NOT your HICK American no liquidity needed Regional Bank.
No story anymore. Boo hoo.
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Care to revisit this, Dolce?
Those IQ 51-70 hick Americans may well get very rich off the backs of smug Europeans. Hehe.
This story has legs.
@#124 Jane24
“You have told us on this blog that you are wealthy. Why did you leave your parents as wards of the state, and not upgrade? ”
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Kitchen renos are horrendously expensive……
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Good questions.
I left my parents as ‘wards of the state” because at that point in time I was still a wage slave in Canada myself. I hadn’t realised yet that the writing on the wall was find somewhere cheaper to live. Move.
We are not wealthy we just chose to live in cheaper countries with lower cost of livings. We travel extensively at cheaper times of year using free accommodation from http://www.homeexchange.com. We have a lovely house for three weeks in July in Montreal for free. Highly recommended.
Yes kitchen renos are very expensive indeed in Canada. People there expect top grade everything. By reusing some units, wall tiles and counters from the old kitchen and some good buys on facebook marketplace I am hoping to bring it in including some plumbing and electricity re-jigs at $10,000 Cdn. It is not what you make in life, it is what you spend.
@#69 Jane24
“People there expect top grade everything. By reusing some units, wall tiles and counters from the old kitchen and some good buys on facebook marketplace.
+++
I believe we in the trades refer to jobs that reuse old materials for new renos as “putting lipstick on a pig”.
Looks purty from afar.
#22 Doug Rowat on 03.18.23 at 2:24 pm
#16 Linda on 03.18.23 at 12:23 pm
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Agreed, Doug. Grocery price appreciation is not a result of environmental factors. Consider that the average North American famer is over 60 years old, and in Europe more aged. Not to mention land is priced unattainably high for young folks to buy and participate in food production (not that they would). Just like the rest of economy, but perhaps worse, farming has a demographic problem. Disclaimer: I grew up on a farm.
IF you can’t TRUST the banks with your life savings then what’s the alternative?
#47 Famous Warrior on 03.18.23 at 6:45 pm
#2 Alois on 03.18.23 at 11:10 am
IMHO..tech jobs are the human equivalent of cryptocurrency.
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From the internet … of things!
“Alois could mean “all wise” or “very wise” ”
As they say … there are exceptions to every fool.
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Sticks and stones…..
Prepare for yet another job purge…
So…hoping for a slow down in labour markets and hoping for massive layoffs and job losses?
Sounds like a case of “I hope everyone else gets less so I can get more”.
We need an increase in suffering and losses and desperation – so the market that I have invested in improves.
Sounds just about right.
We are a depraved society.
Nothing new – everyone is out for themselves.
#68 Sail Away on 03.19.23 at 1:31 am
#10 Dolce Vita on 03.16.23 at 1:05 pm
Digging through the archives? hypocrite.
#64 crowdedelevatorfartz on 03.18.23 at 9:38 pm
@#62 Floppie
The Great Central Valley is North America’s achilles heel. A geological or climate driven S2S weather episode could induce a crippling food $ spike.
#64 crowdedelevatorfartz on 03.18.23 at 9:38 pm
@#62 Floppie
Wow!
Huge difference in the drought map.
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COMMENT:
California Drought?
Bwahahahahahaa
Farmer Explains Why California Flushes 95% Rainwater to Ocean | Mark Nakata
https://www.youtube.com/watch?v=ph8UVPogQz4
California agriculture has generally relied on irrigation from stored water. There is/was no lack of water per se.
California Commies have been deliberately drawing down dams etc. to attack food supplies under auspices of saving some invasive species.
Anyone care to speculate the out come if Suisse Nationalizes, move would likely take out the bail-in and equity bond holders plus rock the markets even more so.
Still not a lot of derivative’s talk, aka the Mastodon in the room, but it’s coming.
Tic Toc.
” What the market needs this year is weak corporate earnings.”
WTF…. how on earth are we goig to cook THAT up?
Will Tiff tame inflation as he should or will he try to save the overleveraged with a prolonged hold on interest rates?
If he holds or lowers rates, Canada is headed into a lost decade, a much lower Canadian dollar, stubborn inflation and economic stagflation. Valuable capital will be wasted propping up zombie companies and people.
If he wants Canada to recover quickly he must allow capitalism to play out.
The insolvent should be liquidated. The illiquid but still solvent should get loans at punitive rates provided they have good collateral. This will restore lending and good capital allocation. What’s a central banker to do?
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