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September 23, 2020 | Bottomless

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.

No Time for Austerity.

You betcha. And that was the theme of today’s Throne Speech. What a surprise.

The Trudeau government is gearing up for a national child care program, universal pharmacare, enough spending on green initiatives to create a million jobs (good luck with that), plus oodles more money for testing, vaccine development and pandemic-fighting. Enhanced EI benefits will be extended and the wage subsidy program rolled right into next summer. No big UBI announcement but – as detailed here a few days ago – that $199-billion-per-year Godzilla would require massive tax changes to fund.

Speaking of tax, Throne speeches never detail such stuff – and we’ll get a lot more from Commander Chrystia in a few weeks. But the Liberals did promise they will be “identifying additional ways to tax extreme wealth inequality,” attack stock options, and also take a run at the online giants like Facebook.

The key phrase, “this is no time for austerity.” So much for the warnings of bankers, business leaders and those pesky Conservatives. More money will be coming for the travel business, arts, hospitality and targeted subsidies for businesses nailed in soon-to-come regional lockdowns. More for women, racialized citizens, kids and old snorts.

Missing words were ‘deficit reduction’ and ‘debt.’ Oh, and ‘election.’ But not for long.

Short, Sharp & Dramatic

No, that’s not merely a description of me. It also applies to corrections during a bull market – which we have been in now since the shock of Covid wore off. Stocks have been wonky, and generally descending since making all those exciting new highs in August (happened again today).

The FAANG tech giants are vulnerable. The airlines are dying. But cyclicals are gaining ground. The railways are back. Cash is moving into small caps (which always lead a recovery). So a pile of experienced money is positioning for the post-virus world when crazy fiscal (government) and monetary (CB) stimulus wears off and companies start making decent money again in a growing GDP.

But before that happens, the tree will likely be shaken again. More volatility. More RobinHooders squished. And, of course, there is this…

The Vote from Hell

America has to choose between a crazy 74-year-old serial fibber and narcissistic bully and a 77-year-old crusty career politician with a platform of mush. Not pretty. On one side is the evangelical, F150-driving, rebel forces of the right and on the other the BML, new-green-deal, social justice lefty warriors. A recipe for sustained conflict.

The worry is no clear winner on November 3rd, followed by protracted indecision amid vote counts, legal challenges and conflicting claims of victory. Markets hate uncertainty. Polls are imprecise and anxiety is building.

Veteran trader Ed Pennock had this to say earlier today:

Election polling is inexact. Biden’s lead is shrinking. His Lead has narrowed in Florida, Iowa, North Carolina, Ohio, and Arizona. His lead in Pennsylvania has dropped to 5%. He should be worried. This is how 2016 went. 45 did not win the popular vote. He won the Electoral College. The difference this time will be the contested Mail-In Ballots. Count on it getting Ugly.

Recall that during the Gore-Bush recount in Florida (which took more than a month) the markets shed about 12% of their value. This election could take until the end of 2020 to figure out, and that bull market correction might well reflect it. Who knows? But it seems reasonable to (a) stay invested and ignore the noise and (b) use your shiny new 2021 TFSA money to go shopping. Stuff may be on sale.

Pity the Poor 905

So last week this pathetic blog detailed the decline in urban-core condos in terms of sales and prices, and told you why. You know. The virus. Germy elevators. WFH. The quest for space. And cheapo mortgages.

We also told you about poor Hamilton, flooded with house-horny Millennial condo refugees and their damn cats, driving local prices skyward with multiple offers and extreme bids. The assumptions being made: remote working is forever. Downtown office jobs are relics. You can earn the same money in your underwear at home as you can in the cube. And why not move to some hick city to get an affordable house when you don’t have to commute into the Big Smoke?

Well, that’s cute. Reality will arrive for these folks soon enough.

Meanwhile the disease is spreading. Now it’s Fort Erie that’s sizzling, say local realtors. (For the uninitiated, this grimy blue-collar former canal city of 30,000 people sitting 152 km to the west and south of Toronto. The death highway connecting the two is the QEW.)

Sales in the region are up about 40% from last year and prices have risen 15%. Plus, if you move to Fort Erie, you get to see Buffalo across the river, with its picturesque red and blue flashing first responder lights and ever-present glow from smoldering buildings.

Yes. Livin’ the dream.

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September 23rd, 2020

Posted In: The Greater Fool

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