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July 9, 2021 | The Gush

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.

Despite the moaning and wailing of those on this pathetic blog who never want to work again, a lot of people do. Friday’s jobs stats were a total blow-out. This confirms two conclusions: (a) election, and (b) central bank retreat.

Did you see the numbers? Wow. Over 230,000 new hires last month – almost fully reversing the Third Wave lock-‘er-down disaster in April and May. Granted, all the gains were in part-time positions, but this is consistent with where they were created – pubs, cafes, stores, hotels and tourist traps.

So the jobless rate falls below 8% and we have recovered about 2.7 million of the three million positions that were lost when the pandemic crashed into Canada during the spring of ’20. Also interesting: the workforce increased by about 170,000 people, hiking the participation rate to over 65% and erasing months of declines. So, yes, apparently more people are sick of wearing sweats and playing with their doodles and now crave work.

What are the implications?

First, there is no doubt we’re entering a new phase of growth, expansion, recovery and that markets will reflect it. The Roaring Twenties, remember? Look at places like Ontario – 80% of the herd has received one dose and 50% are fully juiced. There is no doubt remaining restrictions will be lifted and that they’re not coming back during this lifetime. Economists expect the GDP will erupt at a rate of over 9% in the third quarter, which is something we might expect out of China, not Canada. For the final three months of the year that should moderate to 6% – which is still explosive (the recent average has been under 2%).

Second, big economic expansion, lots of hiring and the reopening of society will bring a bout of inflation (although long-term trends are going in the opposite direction). Employers will have to pay more, consumer prices will rise and there are going to be w-a-y more cars on the road.

Third, with runaway GDP expansion, the central bank can (and will) pull in its horns. Already weekly bond-buying (to suppress rates and flood the system with money) has been reduced from $5 billion to $3 billion. Next week, the betting is, it will drop to $2 billion, then down to one billion, or even zero, by the end of the year. As mentioned here, despite the catcalls and raspberries from below decks, the first central bank rate hike will come a little while after that. Expect quite a few.

After all, why stimulate something that no longer needs stimulating? The CB would rather end quantitative easing and increase its benchmark rate, lest it be left without tools when the next inevitable downturn comes. This one is over.

What now?

US interest rates have started to back up again, and equity markets have romped on to new highs. There’s little doubt the next year or two will hand over explosive growth, but we’re also in the middle of an AI revolution, while WFH has messed up the labour force. Bricks retailers are dying and the very nature of work is changing. Covid has not gone away but the conditions that spurred a global residential real estate boom won’t last much into 2022.  Governments, like CBs, can’t afford to keep the spending firehose gushing. Taxes won’t stay put, either. Corporate earnings are going straight up. And we just might be engineering our own energy crisis. So much to digest.

Be balanced. And diversified. Don’t blow it now.

The Mounties just Tweeted out this

It’s been more than a week since perps hacked down and made off with my flag. It happened in the hours before the dawn of Canada Day and after I had received demands from Indigenous supporters to remove it from the wee bank because seeing the emblem of our nation wounded their eyes. In fact they even convinced local politicians to ask that it be lowered, as the flag was ‘harmful to members of the community.’

I did not. So they harmed me instead. And while I really, really, really regret that my prized, historic possession was taken, I would have regretted far more falling to my knees and subjugating to the social justice warriors. Nobody was forced to celebrate Canada Day. But, likewise, no one had the right to stop me from doing so.

Statues. Churches. Burning. Vandalism. Theft. If you want to turn goodwill into disgust, this is the path.

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July 9th, 2021

Posted In: The Greater Fool

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