- the source for market opinions


August 27, 2015 | Not Yet

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

 HA HA Garth- You and all the peon’s that listen to your financial ‘advise’ are losing it all! Get physical gold and silver you stupid bitch.

Normally I delete one post in a few hundred. Normally I tell you why.

But over the past few days I gave up and just hit the KILL button, and obliterated a mess of comments like the one above. They came from the usual rabble – people who hate America and want it crushed. GIC-lovers and fear-biters who crave a market crash to justify their own wussiness. Anti-1%ers and proud members of the socialist horde who love it when the investment portfolios of others are smouldering. And, of course, the under-employed, basement-dwelling Millennial masses who would like Boomers to retire in the penury they richly deserve for stealing all the houses and hoarding all the jobs.

Well, tough.

In case you didn’t hear the news, equity markets in Toronto and New York soared again Thursday. We’ve just had the best two-day rally since way back in 2009. You can tell how powerful this is by the fact the stock market no longer leads the 6 pm TV news or is plastered across every newspaper’s web site. When things go well, you don’t hear about it. When they suck, it’s a prelude to oblivion.

Not only did stocks recover in a dramatic fashion (adding about a thousand points in two sessions), but there was an unprecedented rise in the value of oil – ahead 10% in a single day. Crude’s now heading back towards the $45 level, just days after it looked destined for thirty bucks. In concert, commodity prices in general romped to better levels, and Canada’s prospects perked a little.

At the heart of all this?

No surprise. It’s the steadily recovering US economy. So I hope this week was a reminder to everyone of this blog’s premier advice (after the relationship counseling, of course): never bet against America. Those who did, shorting US equity markets, were creamed. People who gave up their nerve and sold into the storm on Monday lost a whack of money. There was never any doubt, as this pathetic blog told you, that the positive fundamentals remained in place.

So now we know the American economy shot the lights out in Q2. Annualized economic growth was a ribald 3.7%, blowing past all of the expert estimates. This comes atop growth of 2.3% in the first quarter. That was enough to ignite stocks and restore confidence around the world, since the American economy is the undisputed engine of the global economy.

There was more, too.

Consumer confidence is heading higher. This is no surprise with an average of 211,000 new jobs appearing in the US every month. As I told you, 13 million of them have been created in the last 65 months, the most impressive record in a generation. At the same time cheaper energy has reduced household costs, and American families – unlike ones here – have steadily reduced their debt levels, so the costs of servicing that debt drop. Now consumer and business spending is on the increase.

Corporate profits have been consistently robust. Jobless benefit claims are declining. Sales of resale homes in the US climbed in July for the sixth time in seven months. New home sales are at the highest level in eight years. And now the stock market has enjoyed the strongest back-to-back advance since the current bull market was born six years ago.

Stocks have recovered in Europe and in China, where the index soared 5.3% amid more moves by the interventionist government to stabilize markets and restore investor confidence. And now the next question is when the Fed will begin its program of raising interest rates. Whether it will occur is not even a debate. Only when.

The betting had been for September 17th, prior to the wild swings on equity markets. Now traders figure there’s a 30% of that happening, but about 100% odds of the pop taking place by the end of the year. Maybe October, or an outside chance of December. The exact timing is less important than the event itself – an historic one, after 10 long years of cheap money policy.

So, not much has changed.

America motors ahead. The recovery is intact, and strengthening. The bull market for equities continues after steam was blown off and values corrected. The days of cheap money are still numbered. Expect higher bond yields and more costly mortgages here by Thanksgiving. This is likely the low water mark for interest rates and the high water mark for house prices.

It also reminds us of how many souls there are capable of being led around by the nose, quick to panic, devoid of confidence and willing – if not wanting – to believe the worst.

There’s a reason wealthy people stay that way. And why others get DELETED.

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the Weekly Recap.

August 27th, 2015

Posted In: The Greater Fool

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site


This site uses Akismet to reduce spam. Learn how your comment data is processed.