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October 11, 2019 | The Thanksgiving

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.

 

Forget Blackface. Ignore Lavalin. Who cares about Jody or Jane? Or that creepy India trip? Deficits, debts and a fake feminist in the PMO don’t matter much when you have… a job.

So the latest unemployment numbers, coming just 10 days before the federal election, make it hard for guys like Andrew Scheer to argue T2 has screwed up the economy. We gained 54,000 positions last month. On top of more than 80,000 the month before. That drives the jobless rate down to 5.5% (the lowest ever was 5.4% a few months ago), and all of the new positions were full-time. Yeah, too many in government, but a job’s a job.

The biggest number was this: 4.3%. That’s the average increase in working incomes year/year. It beats the US experience, and means with 2% inflation people are actually starting to get ahead. This was all the more impressive since economists had expected something less than 10,000 for the new-jobs number.

So, as a result (a) the loonie puffed up and so did Bay Street, (c) the odds of a Liberal re-election doubtlessly jumped and (c) you can forget about a Bank of Canada cut at the end of October. In fact, don’t be surprised if mortgage rates begin swelling again right after the Turkey Weekend.

Meanwhile more joy is coming from Washington, where Donald Trump – fresh from causing human misery, warfare and bitter disappointment in Syria – has decided he needs a political win. So on Friday emerged news of ‘significant progress’ in trade talks between America and China. It looks like new tariffs set to be imposed next week will be kaput, and the temperature in the world’s biggest economic spat will fall considerably.

Predictably, US stock markets soared hundreds of points, wiping away the October malady and putting them within a few hairs of all-time highs. American equities have gained more than 15% this year. Add in dividends, and 2019 has been a terrific one for investors, yet a miserable one for the GIC-afflicted.

So what next?

As stated, forget what anyone told you about the Bank of Canada. It does not want to lower rates, and won’t. Mr. Bond Market says so. Look what just happened to the yield on 5-year Government of Canada debt. This is the benchmark used to price five-year mortgages. Like I said, the bottom may be in.

 

And the Fed? If there truly is some kind of America-China deal (as this blog told you would happen), a significant dollop of risk has been removed from not only the US economy, but that of the globe. The central bank there has nipped rates twice, but indicated any further moves would be based on data. So a trade deal, a stock market surge and good jobs numbers in that country pretty much guarantee those four or five rate cuts people were talking about are pffft.

Isn’t it interesting what a few days will do?

No recession. No rate cuts. Rising mortgage costs. Stocks swelling to record levels. Insufferable investors. And deeply flawed political leaders in both countries now looking more secure than ever.

But the biggest news this weekend, of course, is Bandit’s birthday. His 15th year. How can I complain about anything?

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October 11th, 2019

Posted In: The Greater Fool

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