Juggling Dynamite - Yesterday marked the best stock market bounce at the end of a quarter since September 2008. Far from an all-clear sign, bounces like that are most common during bear markets (shown below, courtesy of Bespoke). Mean reversion has made some progress in the sell-off to date, but Berkshire Hathaway is not parting with its cash […]

Juggling Dynamite - Canada’s economy has generated no economic growth in five months and no job growth in eight months. Meanwhile, the household wealth effect is in reverse, with home sale prices nationally down 20% over the past 4 years and the stock market negative year-to-date. The S&P 500 and Canada’s TSX are both off more than 7% […]

Juggling Dynamite - Over the past decade, private equity has leveraged insurance companies’ balance sheets, increasing financial risk for all of us. Read An Open Letter to Speaker Johnson. The essay goes into specific numbers. Here are some of the big picture implications: When a PE firm raises a fund, the capital has a defined life. Ten years, maybe twelve. […]

Juggling Dynamite - BMO Capital Markets is warning that Canadian home prices haven’t moved in nearly a decade, once adjusted for inflation, and are now in the midst of the largest correction since the 90s. Unfortunately, years of prices leaping far beyond increases in household income have set Canada up for a painful payback period, now in year […]

Juggling Dynamite - The consensus remains bullish on inflationary expectations, including precious metals, stocks and oil. But then, recency bias is the typical human response. It’s worth considering that cycle peaks could be behind us. Gold pared dramatic losses as US President Donald Trump postponed military strikes against Iranian energy infrastructure for a five-day period after what he described […]

Juggling Dynamite - I don’t know Jerome Powell and have no idea whether he is, or will be judged by history as doing the right things in line with his public duty. But at a time when integrity and selflessness in public office seem to be in short supply, this speech is worth a listen. At the American […]

Juggling Dynamite - Crypto bounced alongside fossil fuel prices since the Iran war broke out on February 28 — though it’s still down 43% since October. Other global markets generally plunged along with metal prices (shown below, courtesy of The Daily Shot). US and Canadian government bonds held up second best, with Canada’s 5-year Treasury price dropping 2.4% […]

Juggling Dynamite - The Bank of Canada press conference yesterday finally admitted facts about Canada’s housing market: “The housing market is looking weaker, and weaker than we had incorporated into our January outlook. So, that’s something we will be looking at when we prepare the April outlook.” Canadian home prices “need to come down” and “housing feeds into our forecast […]

Juggling Dynamite - With higher oil prices expected to impact inflation, financial markets shifted from anticipating rate cuts to considering the possibility of rate hikes in Canada. In response, longer-term bond yields rose for the first couple of weeks of March, pushing up borrowing costs. About 1.15 million Canadians are expected to renew their mortgages in 2026. Renewing […]

Juggling Dynamite - An oil shock amid rising credit stress and negative job revisions, unexpectedly pushing up unemployment.  Every cycle is a little different, but similar developments have marked the onset of past recessions and bear markets. Oil price spikes reduce economic demand, partly because they tend to keep interest rates higher for longer. The segments below do […]

Juggling Dynamite - In February, the Canadian economy ‘unexpectedly’ lost 83,000 jobs, the most since January 2022 (shown below since 2020), driving the unemployment rate up to 6.7% after a 25,000-job loss in January. Economists surveyed had expected employment to rise by 10,000 and the jobless rate to be 6.6%. Employment declines were widespread and across both goods […]

Juggling Dynamite - The plan to bring mom-and-pop investors into ‘alternative’ investments was always about finding a pool of greater fools to keep inflows coming. The ‘free money’ years covered up a lot of naked swimmers that are now being revealed. When people need cash, they sell what they can, and this is how liquidation contagion spreads between […]

Juggling Dynamite - Oil and gas prices are rapidly rising around the world amid the U.S.-Israel war with Iran. Andrew Chang explains what’s driving the surge and why predicting the next moves in the oil market is so difficult. Here is a direct video link. Spikes in oil prices, especially late in business cycles, when asset prices and debt […]

Juggling Dynamite - Last week’s near 35% spike in the price of oil (WTIC) was the biggest gain in futures trading history, dating back to 1983 (shown below, courtesy of Bespoke Investment Group). After closing at $90.90 a barrel on Friday, the price rose to $119.48 intraday yesterday, then slumped 15% to $80 this afternoon. That’s still up 47% […]

Juggling Dynamite - The investment sales world loves to talk about the defensive benefit of holding different equity sectors and global markets. The pitch is that there’s always a bull market somewhere, so we can always-be-buying risk-on products. The US stock market is heavily concentrated (39%) in the top 10 most expensive companies today (dark blue bar below). […]

Juggling Dynamite - After the 2008 financial crisis, more than a decade of zero-interest-rate policies drove an explosion in private credit products and funds that were initially marketed to institutions and pensions under the oxymoron of safe ‘high-yield’. Then, from March 2022 to May 2023, a record succession of central bank rate hikes took the US Fed rate […]

Juggling Dynamite - Macro shocks are a constant throughout time. The market impact is often dramatic in the short-term. Longer-term, outcomes vary depending on the level of optimism that was priced in when the shock hits. Coming into 2026, most asset markets were exhibiting excessive optimism -pricing the best of all possible outcomes. Just one example: the S&P […]

Juggling Dynamite - Private equity returned fewer profits to investors for a fourth straight year as the industry sat on $3.8 trillion of unsold assets and struggled to raise money for new funds. Distributions as a percentage of net asset value remained at 14% last year — the second-lowest level since the depths of the 2008 financial crisis, […]

Juggling Dynamite - From 2009 to 2022, alternative and private lenders multiplied as traditional banks tightened underwriting standards and yield-starved investors looked beyond conventional options. As usual, ‘easy money’ led to overconfident, under-analyzed allocation decisions across many asset classes at once. Real estate busts tend to be slow-moving, and then suddenly, all at once. Eight years after the […]

Juggling Dynamite - A Bank of Canada study estimated that for every dollar increase in home values, spending rose by 5.7 cents. A New Zealand study found that the housing wealth effect had an even greater impact in reducing spending when home prices were falling than when they were rising. Prices in Canada have fallen more than 20% […]

Juggling Dynamite - The benchmark Canadian home resale price has fallen more than 21% in nominal terms (25-30% in real terms) from the 2022 cycle peak (shown below since 2020). But new home prices have fallen just 8% from the peak nationwide because builders have used incentives, including mortgage rate buydowns, to avoid top-line price cuts. More price cuts […]

Juggling Dynamite - Residential real estate is the most widely owned and highly leveraged asset class for households. For these reasons, housing cycles have outsized effects on consumer confidence, spending, the economy and financial markets. The deflating housing bubble will remain a major macroeconomic force in 2026. The discussion below is worth a listen. Demand for US homes […]

Juggling Dynamite - Global equities began the year near record highs, supported partly by continued enthusiasm around Artificial Intelligence (AI) investment and expectations of policy easing. However, February has seen more uneven performance: Technology shares have led the weakness as investors reassess how AI translates into corporate profits, GDP, jobs, and security/insecurity. See, AI Fears Drive Volatility, Triggering Declines […]

Juggling Dynamite - As I have noted many times, historically, a maximum of 3x household income has been considered the limit of what is considered “affordable” for homes. In Canada, with a median household income of 84k, this would mean homes priced at no more than $252,000. Today, the national average home sale price is $660k (down from […]

Juggling Dynamite - Stocks, commodities, junk bonds, precious metals, and crypto assets all leapt together into late 2025; now, Bitcoin, the crypto leader, is down 44% since October, and the broader crypto market has vaporized trillions in notional value while billions flow out of crypto-based Exchange Traded Funds. US stocks trading at all-time bubble-high valuations (S&P 500 composite […]