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January 27, 2023 | The Bank of Canada Hikes Rates Again But Promises An End To The Pain

The Bank of Canada (BOC) met expectations Wednesday with a 25-basis point increase in rates, and hinted that it might go on hold. This was the eighth consecutive interest rate increase from the BOC. Markets expect inflation to fall quickly allowing the BOC to cut rates, perhaps as soon as the middle of 2023. Until […]

January 20, 2023 | Canadian Housing is in a Slump But Not a Crash

The Canadian housing market is in a correction, but not yet in a crash. The CREA, a real estate industry association, put out a report that showed a 13.2 percent decline in house prices from the peak that occurred early in 2022. Will this housing correction turn into a crash? The CREA, a perennially bullish […]

January 13, 2023 | Inflation is Not Going Away Any Time Soon

Inflation as measured by the CPI is moderating but it is not likely to hit the Federal Reserve target of 2 percent soon, despite a widespread and growing belief to the contrary. A popular narrative about inflation: The surge was caused by the war in Ukraine, COVID relief government spending and supply chain disruptions and, […]

January 6, 2023 | Speculation on Interest Rates and Inflation in 2023

Speculation on the direction for interest rates will dominate stock market chatter in the first half of 2023. In November 2022 market participants had started to anticipate a decline in inflation which would allow the Federal Reserve to drop interest rates, leading to a new bull market in stocks, bonds and housing. Will interest rates […]

December 16, 2022 | A Breakthrough in Fusion Energy Could Change The World

Commercial fusion energy would change the world. This week U.S. researchers showed that more energy could be produced by fusion than was used in the process. This is called a “net gain”. Is this the energy breakthrough the world was waiting for? Fusion promises to provide a source of energy that is plentiful and cheap, […]

December 9, 2022 | The Central Bankers Resort To Wishful Thinking

The Bank of Canada resorted to wishful thinking this week while raising interest rates again and hinting that this increase might be the last one. The Bank of Canada (BOC) raised rates this week by 50 basis points. The prime rate at Canada’s banks almost immediately jumped by the same amount to 6.45 percent. In […]

December 2, 2022 | Central Banks Apologize as Borrowers Suffer

  Philip Lowe, governor of the Reserve Bank of Australia (RBA), made a public apology for the statements that were made about interest rates. He told people that rates would stay low and now that rates have risen substantially many people are in trouble with very large mortgages. Reserve Bank Governor Philip Lowe said that […]

November 25, 2022 | Canada’s Central Bank Downplays The Risks of a Financial Crisis

Canada’s private sector debt problem keeps growing larger. With private sector debt at about 230 percent of GDP, Canada has no room for error. And rising interest rates could force large numbers of mortgage borrowers into default, which could create a financial crisis. But the Bank of Canada is not worried. Bank of Canada staff […]

November 19, 2022 | The Bernanke Nobel Prize Should Have Gone To a Different Economist

Ben Bernanke, then-chair of the Federal Reserve, made his wrong prediction about real estate in a 2005 interview, just a year before the collapse in house prices in the US. The collapse in housing and subprime mortgages triggered the Global Financial Crisis (GFC) from 2006 to 2009. In October Bernanke was awarded a Nobel Prize […]

November 11, 2022 | Canada Faces a Huge Challenge with Emission Reductions

Canada is about to hit the wall over CO2 emissions. Canada’s commitment to reduce by 290 million tonnes annually looks increasingly difficult to achieve.   Canada is second only to Saudi Arabia in emissions of metric tons of CO2 per person, due to Canada’s status as a major producer of oil and gas. Other countries, […]

November 4, 2022 | Tesla Reports Record Production But There are Hints of Bumps in the Road

Tesla reports another record quarter of production but there are hints of some bumps in the road ahead. The company is generating huge amounts of free cash flow, even while building out two new factories. But a weak stock market and looming recession could affect Tesla. In full disclosure I have owned and driven a […]

October 28, 2022 | Bank of Canada Wavers

The Bank of Canada blinked first as recession looms and the economy continues to adjust to much higher interest rates. The BOC hiked interest rates only 50 basis points on October 26 when the market expected 75 basis points. Is the Bank of Canada signaling that rates are high enough now? Source: MacBeth MacLeod Partners […]

October 21, 2022 | China is Going Through a Rough Patch with Weak Growth

China probably slipped into a recession recently. On October 18, 2022, data that were expected for third quarter GDP failed to appear. Websites stated that the information was delayed. China matters to everyone on earth as the second largest economy in the world. But there are signs of trouble. Should we worry about China? As […]

October 14, 2022 | Canadian Real Estate Speculators Feel The Heat From Higher Rates

Homeowners and real estate speculators in Canada are already feeling the heat from interest rate increases that have had the effect of tripling mortgage interest for some people. A petition was started in protest against higher rates, and by Thursday October 13, 2022, had gathered over 15,800 signers. This makes the petition one of the […]

October 7, 2022 | OPEC Cuts Crude Oil Supply Again

OPEC cuts oil production by another 2 million barrels per day, adding to upward pressure on the crude oil price. Will OPEC keep control of the market for crude? On October 5, 2022, OPEC+ announced another 2-million-barrel reduction in crude oil production. OPEC+ refers to the OPEC members plus other large producers who are not […]

September 30, 2022 | Panic in London Over Interest Rates and Bond Prices

The panic in UK government bond markets that gripped London Monday was a trigger for emergency action by the Bank of England, which reversed its monetary policy in an attempt to calm markets. The UK budget released late last week was not well received. Chancellor of the Exchequer Kwasi Kwarteng, who delivered the government budget, […]

September 23, 2022 | The Fed Talks Tough as the Inflation Fighter

The Federal Reserve jumped its policy interest rate to 3 percent this week, from 2.25 percent. The Fed reiterated its commitment to getting inflation back to the target level of 2 percent, from its current pace of around 8 percent. The Fed is talking tough. Can the Fed walk the walk or is it just […]

September 16, 2022 | CPI Shocks The Financial Markets

The U.S. CPI for August shocked the markets this week, leading to an almost 4 percent decline in stock markets. The CPI showed a small decline, but the “core” CPI increased. Will inflation persist at these high levels? The market was expecting a moderation in the inflation number but got a shocking increase in some […]

September 9, 2022 | The Bank of Canada Says Full Speed Ahead

The Bank of Canada increased its policy rate by 75 basis points on Wednesday. It also stated that the fight to contain inflation is likely to last for some time. You could imagine them saying, “damn the torpedoes, full speed, go ahead.” How much pain will higher rates cause? The Governing Council of the Bank […]

September 2, 2022 | Junk Bond Prices Have Collapsed

Junk bond prices have collapsed, losing more than 15 percent of their value this year. But the push to higher rates by central banks and the possibility of a deep recession point to a much deeper adjustment during 2023. This will create some great opportunities for stock and bond investors.   This chart shows how […]

August 26, 2022 | Green Hydrogen is a Great New Opportunity for Newfoundland and Canada

Germany wants Canada to become a world leader in the production of hydrogen. With a visit from a star-studded delegation from Germany, Newfoundland gains credibility as a potential new centre for clean hydrogen. The delegation included German Chancellor Olaf Scholtz, the Economy Minister Robert Habeck as well as the CEOs of Volkswagen, Bayer, Uniper (spin-off […]

August 19, 2022 | Warren Buffett Loses His Magic Touch

The massive conglomerate Berkshire Hathaway, run by the famed investor Warren Buffett, reported a large loss in the second quarter. Berkshire lost money because of accounting rules that require that losses on securities that are held must be recorded in earnings. Has Warren Buffett lost his magic touch?   Source: Berkshire Hathaway Warren Buffett is […]

August 12, 2022 | The Official Recession Label Will Come Much Too Late To Be Useful

The probability of recession in the U.S. is high. The popular definition of recession — two consecutive quarters of negative growth — has already occurred. But there is no official declaration of recession, yet. Why the delay in calling a recession? Some people argue that a U.S. recession has started. The test of two consecutive […]

August 5, 2022 | The Official Recession Label Will Come Much Too Late To Be Useful

The probability of recession in the U.S. is high. The popular definition of recession — two consecutive quarters of negative growth — has already occurred. But there is no official declaration of recession, yet. Why the delay in calling a recession? Some people argue that a U.S. recession has started. The test of two consecutive […]

July 29, 2022 | Persistent and Large Rate Hikes by the Fed Signal the End of an Era

This week’s large rate hike by the Federal Reserve means that the era of the Greenspan Put is over. The Fed increased its base rate by 75 basis points this week and hinted that more increases are coming, in spite of widespread worries about a weak stock market and an economy that might be already […]

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