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November 26, 2021 | The Bank of Canada is Ignoring the Risks

Recently the Deputy Governor of the Bank of Canada, Paul Beaudry, made a speech about the resilience of the Canadian financial system. He discussed several serious vulnerabilities threatening the system but claims that financial institutions will be fine, even if those risks trigger a financial crisis. Is the Bank of Canada ignoring the risks? The speech was […]

November 19, 2021 | Gold Could be a Hedge Against a Fed-Induced Financial Crisis

Gold bullion and gold mining shares are about as depressed as they ever get in relation to bonds and stocks. Gold and gold mining equities used to be considered a hedge against inflation and the debasement of paper money. With the Fed reluctant to take strong measures to fight inflation will gold finally have its […]

November 12, 2021 | The Federal Reserve Ignores the Biggest Risk to the Economy

The Federal Reserve issues a financial stability report twice a year that assesses the resilience of the financial system and highlights near-term risks. Is the Fed failing to see the biggest risk? As the report says, “In an unstable financial system, adverse events are more likely to result in severe financial stress and disrupt the flow […]

November 5, 2021 | The Fed Risks Triggering Another Taper Tantrum

The Federal Reserve announced that the quantitative easing (QE) program that has been in place for more than a decade will be phased out gradually. In 2013 when the Fed tried to exit the QE program the markets threw a tantrum, government bond yields jumped from 2 percent to 3 percent and the Fed backed […]

October 29, 2021 | Elon Musk is the Wealthiest Billionaire on Earth

Elon Musk, CEO of Tesla and Space-X has become the world’s wealthiest billionaire. He recently passed Jeff Bezos, founder of Amazon, to reach the number one spot. Will Musk become the first person to reach $1 trillion? As Tesla shares reached a peak of $1,000 on Monday, and the value of the company on the […]

October 22, 2021 | Canadian CPI massively underestimates housing costs

Canada’s statistics bureau, StatsCan, says that CPI-measured inflation is running hot. Year-over-year gains were 4.4 percent for September 2021, one of the fastest rates among developed countries. News reports highlighted rising food and gasoline prices, but house prices are soaring, by 18 percent from a year ago. Why is CPI inflation only 4.4 percent with […]

October 15, 2021 | Rapidly Building Inflation Threatens

Inflation is threatening to get out of control and central banks could be asleep at the switch. In the U.S. the Fed remains supremely confident of its ability to control rising prices, if needed. Is the Fed overconfident? US inflation CPI hit a 13-year high this week at 5.4 percent growth year-over-year, but central bankers […]

October 8, 2021 | Tesla Results are Electrifying

Tesla released outstanding sales for the third quarter ending September 30, 2021. At 240,000 vehicles over three months, Tesla deliveries will soon reach 1 million vehicles annually. The rest of the auto industry remains in a deep slump. Is Tesla’s rapid growth proof that the future is all-electric? Tesla sales remain relatively small in comparison […]

October 1, 2021 | Twin Growth Challenges in China will Test the World

China is being hit by the double whammy of a real estate slowdown and electrical power shortages. The Chinese system will be put to a severe test. Will China’s twin challenges impact the world economy? Since China was initiated into the WTO in 2001 the Chinese economy has led the world in economic growth. In […]

September 24, 2021 | China Evergrande is not Lehman Brothers

The China Evergrande debacle continues to worsen. China Evergrande, the second largest property developer in China and the most indebted in the world, missed loan payments this week, triggering a technical default. Is the China Evergrande crisis like the Lehman Brothers bankruptcy? Lehman failed in 2008 with $630 billion in liabilities and $600 billion in […]

September 10, 2021 | Irrational Exuberance is Here Again

Irrational exuberance is a term introduced by Alan Greenspan in a speech in December 1996. In 2021, the degree of enthusiasm for financial assets is at an extreme seldom seen before throughout history. Will this episode of irrational exuberance lead to a crisis in markets? Some market analysts and economists are very concerned about the […]

September 3, 2021 | Corporate Debt Threatens the Recovery

Corporate indebtedness has been increasing at a steady rate for years. The rate of increase has even accelerated since 2008. This amount of debt in the corporate world makes the economy more vulnerable to new shocks. Will elevated corporate debt trigger the next financial crisis? From the FT.com (paywall) “Unhedged” Robert Armstrong writes: “Corporate debt has never […]

August 27, 2021 | Stock Market Speculation Soars

Speculation in stock markets has been growing for many months. But the latest review of several reliable indicators of speculation shows that a shocking amount of speculative fever has appeared in stock market activity. Does this degree of speculation always lead to a stock market crash? The highly respected GMO LLC quarterly letter compiled a […]

August 20, 2021 | Property Developer China Evergrande Could Trigger a Crisis

China Evergrande Group, one of the largest property developers in the world, appears to be unable to pay its debts. Investors reacted badly when founder and Chairman, Hui Ka Yan, stepped down from his role as chair of the most important unit of the company, Hengda Real Estate. Could China Evergrande trigger a financial crisis […]

August 13, 2021 | Code Red Alert on Climate Change

A report from the UN Intergovernmental Panel on Climate Change triggered a code red alert on the impact of human-induced global warming. The sixth assessment points out that the earth’s climate has warmed by 1.1 degrees Celsius (C) since the Industrial Revolution and immediate action is necessary to limit future temperature increases. Antonio Guterres, UN […]

August 6, 2021 | Central Bankers Risk Losing Control of Inflation

Inflation worries are getting to the Bank of Canada. In an unusual move for a central banker, the current Governor, Tiff Macklem, took to the print media to express a controversial point of view. Macklem wanted to reassure Canadians that inflation is under control, and if ever it is not, the Bank of Canada can […]

July 30, 2021 | China Stock Markets Getting Cheaper and Cheaper

Stock markets in China are getting even cheaper. The Hong Kong-based Hang Seng Index is down more than 20 percent from its January 2018 high. The Chinese government is cracking down on the largest technology companies. Investors are getting spooked by these anti-market moves. Is this sell-off a buying opportunity? Investing in China means dipping […]

July 23, 2021 | A Gray Rhino in China Could Rock the World

China has a property bubble second to none in the world. Evergrande is the second largest property developer in China and one of the largest in the world. Could Evergrande’s troubles burst the Chinese property bubble? Source: Macmillan Publishing, 2016 Michele Wucker wrote the book on gray rhinos, called “The Gray Rhino: How to Recognize […]

July 16, 2021 | OPEC Faces an Existential Threat

OPEC failed again to reach agreement among its members and others to increase the supply of crude oil, a failure that risks an even greater surge in the price of oil which could trigger a worldwide recession. Five of the last six recessions have been preceded by a spike in the price of crude oil. […]

July 9, 2021 | Canadians Need Wishful Thinking to Believe in the Housing Bubble

Canadian housing is expensive. Household debt in Canada is at record levels. And yet there is still enthusiasm about buying more real estate, and very little fear of a crash. Why are Canadians so complacent about houses? Canadians buying real estate have a very positive view about real estate prices. They have little or no […]

July 2, 2021 | Wilful Blindness and money laundering

“Wilful Blindness”, by Sam Cooper, describes how Canada has become a prime destination for money laundering. The book, released in 2021, ranks as a best seller for its entertaining and shocking descriptions. However, the reader is forced to ask uncomfortable questions about Canada. Why have Canadians allowed their country to become a hiding place for […]

June 25, 2021 | Housing Bubble in Canada One of the Biggest

Canada has one of the largest housing bubbles in the world, according to Bloomberg Economics. The top 3 countries at risk are New Zealand, Canada and Sweden. The warnings signs are as intense as they were in the run-up to the global financial crisis in 2008, according to Bloomberg. Could Canada’s housing bubble trigger another […]

June 18, 2021 | The Federal Reserve Hints at Higher Rates

A turning point for interest rates may have arrived. Federal Reserve members hinted at raising their official interest rate above zero sooner than expected. Until now the Fed had maintained that rates will stay “lower for longer” without any hint imminent increases. How significant is this subtle shift in the Fed forecast for future interest […]

June 11, 2021 | Higher Inflation Puts a Popular Investment at Risk

U.S. Consumer Price Index (CPI) inflation increased by 5 percent year-over-year, and 0.6 percent in the month of May – an annual rate of 7.2 percent. The core CPI, which excludes the volatile components of food and energy, rose even faster at 0.7 percent. What popular investment would lose 43 percent if this level of inflation […]

June 4, 2021 | Activist David Threatens Exxon Mobil Goliath

Exxon Mobil suffered a setback at its annual shareholder meeting in voting for members of the board of directors. Exxon lost the vote on three members, giving an activist investment fund a quarter of the seats on the twelve-member board. This new firm, called Engine No. 1, says that it is “pursuing long-term value by […]

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