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ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

November 4, 2016 | Bitter taste

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.

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With but two trading days left, financial markets have decided to turtle. This, after all, is one for the history books. By Friday night US stock markets had posted their longest slide in 36 years – way back to when I was a child in 1980. The latest election polls had narrowed again, showing Clinton grabbing 291 Electoral College votes to Trump’s 241 – meaning the impossible had a 35% chance of happening.

The election made the latest positive job stats irrelevant, even though they should promise a rate hike next month. The coming vote has propelled the VIX (the ‘fear index’) higher for the ninth day in a row – something that’s never happened previously. Bond prices climbed the most in months. As the opinion polls indicated growing populist support for the untested, rebel billionaire and disenchantment with the status quo career politician, more and more money moved into safer havens. Wall Street can still taste Brexit. It’s bitter.

The best-case scenario for financial markets, which hate uncertainty, is a Clinton win, then compromise government as she works with a Republican Congress. The worst case is an election without a clear winner, or one in which Clinton squeaks by and Trump refuses to concede, becoming an agent of social unrest. Given the anti-government, anti-trade, anti-elites, anti-immigration, anti-corporate, anti-global, pro-patriotism and protectionist stance of the Trumpian masses, this is viewed in many bank towers as something akin to the plague.

Well, Monday and Tuesday will deliver more of the same. If there’s no absolute and certain winner on Wednesday, expect worse. Or if a new president is elected with a clear mandate, brace for the opposite. Remember that whomever is POTUS when the dust clears, the economy won’t change, nor will corporate profits, consumer spending, or the capital markets. The best defence is a balanced and globally-diversified portfolio, with 40% in safe stuff that’s there to stabilize things, counter the volatility and hedge against flighty equities.

By the way, last night a CBC type asked a Trump supporter at one of his revival-hall rallies what she’d do if her hero fails on Tuesday night. “Well,” she drawled, “I’ve got my guns and my gold.”

Donald Trump has made the nutbars think they matter. Maybe they do. May Allah help us.

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So it wasn’t just the US that had a good month for new jobs. Canada recorded a boffo performance with 44,000 fresh hires. Sadly, far too many were part-time, but a job’s a job, nonetheless.

The big news is Canadian interest rates aren’t going lower soon. Maybe never, actually. First we had that big announcement on Tuesday that the T2 feds will be spending $81 billion they don’t have in order to finance the digging of holes and building of bridges. This was exactly the news the Bank of Canada was praying for, so it need not drop rates to rescue the economy – but risk making the locals even hornier to borrow.

Second, a good jobs report – the best in months – taking the pressure off the central bank and showing there is some momentum out there. Third, Ottawa’s new deficit/debt/spending (it’s what Libs do best) will be putting some pressure on the bond market, since a ton of money will ultimately be raised there to finance all those new shovels. All in all, no rate hike. This is the bottom. TD Bank signaled that a few days ago by upping its prime mortgage rate. Lock in, kids.

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Many on this pathetic blog consider realtors to be pond scum. That may be unfair to bacteria in the case of Gary ‘Mr. Action’ Fayerman. The Calgary Re/Max dude this week managed to offend almost everyone, where he published this Remembrance Day-Buy My House ad…

remember

Fayerman’s office was peppered with calls suggesting where he could stick all his full-page community newspaper ads. He was savaged on Facebook. The Cowtown media dumped on the guy from a great, sanctimonious height. The realtor’s epic bad taste is now the one thing he’ll probably be remembered for.

When he reacted, Gary say he had no excuse. He felt remorse. It never occurred to him that he would so cheapen and disrespect us all. At least he’s not running for president.

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November 4th, 2016

Posted In: The Greater Fool

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