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July 4, 2020 | Weak Oil Prices Trigger More Bankruptcies

The recent bankruptcy of Chesapeake Energy Corporation, a pioneer in U.S. shale production, highlights the disruptive change that is roiling energy markets. The COVID-19 pandemic recession has triggered a collapse in demand and prices for energy. Is the failure of some large US-based energy producers going to affect Canadian-based producers? The U.S. benchmark price for […]

June 26, 2020 | Canada Loses its AAA Credit Rating

This week the Canadian government lost its status as an issuer of triple-A-rated debt. On Wednesday, Fitch, one of the three debt ratings agencies, lowered Canada’s rating to AA+ from AAA. Until COVID-19 appeared, the Canadian government was one of the least indebted in the developed world. Over the last two decades, the government debt-to-GDP […]

June 19, 2020 | Massive Government Spending Pushes Debt Ever Higher

The economy is sagging badly during the unusual times brought on by the combination of a recession and the impact of COVID-19. Consumers and businesses have cut spending while government deficits have increased exponentially. But the net result is a severe decline in U.S. Gross Domestic Product (GDP) that will impact us for some time. […]

June 12, 2020 | The Search for a Vaccine for COVID-19

A vaccine for COVID-19 is crucial for a complete economic recovery. While a rebound in activity has started, a return to “normal” requires a vaccine that can be delivered to billions of people. Dr. Anthony Fauci has stated that a vaccine would be ready by the end of 2020, or early 2021. Other articles suggest […]

May 29, 2020 | Canadian Banks Downplay Housing Risks

Canadian banks reported their results this week and, as expected, took substantially higher provisions for credit losses. Most of the increase in provisions came from estimates for future losses on performing loans. Banks are required to estimate future losses, based, in part, on a forecast for the economy and unemployment. Many Canadian households will face […]

May 22, 2020 | CMHC Head Warns That Housing Losses Could Be Huge

Evan Siddall, the CEO of the government’s housing agency, spoke to a parliamentary committee on Tuesday about Canadian housing risks. The agency he heads insures mortgages for the riskiest borrowers, those who cannot provide a down payment of at least 20 percent of the home purchase. Siddall suggested that the insurer could lose $9 billion […]

May 15, 2020 | The Debate Over Negative Interest Rates Gets Hot

On May 13, 2020 Federal Reserve Chair Jay Powell made a virtual speech warning about the weak U.S. economy, suggesting that fiscal and monetary policy makers must rise to the challenges caused by COVID-19. Since the Fed has already cut interest rates close to zero, announced unprecedented amounts of asset purchases and emergency lending programs, […]

May 8, 2020 | Shopify Surpasses RBC on the S&P/TSX

Investors in Canada, and elsewhere, are watching with fascination as Shopify, an Ottawa-based company founded by former snowboarder Tobias Lutke, grows to become the largest company by market value in Canada. Will Shopify be the next Amazon? In full disclosure I do not own Shopify (SHOP) or Amazon (AMZN). Shopify’s performance on the stock market […]

May 1, 2020 | The Return of the Saver

The impact of COVID-19 threatens to turn this recession into a unique event with unpredictable consequences. The economies of many developed countries were long overdue for a period of negative growth, and the elevated household debts in Canada, China and Australia meant that the next recession was going to be special. But now, because of […]

April 17, 2020 | Canada Feels the Impact of a Recession

The Bank of Canada could play a key role in mitigating the economic impact of the recession. And the government of Canada will dramatically expand its role as lender, and spender, of last resort. This week both the Bank of Canada and Statcan reported on the troubled economy. What can Canadians expect during this recession? […]

April 10, 2020 | Dare to Look to Other Stock Markets

The U.S. stock market peaked on February 19, 2020 at close to 3,400 on the S&P 500. A correction started the next day, developing quickly into a full-blown bear market. By March 23 that index had lost 34 percent. Since the March 23 bottom the stock market has rallied hard, retracing more than a third […]

April 3, 2020 | Gold Bullion and Gold Mining Shares as a Hedge

Gold bullion and gold mining shares have been used at times as a hedge against the possibility of a cataclysmic event in the markets. Since the arrival of COVID-19 and a severe economic downturn, interest in gold as a hedge is making a comeback. Will gold and gold mining shares perform as a hedge this […]

March 27, 2020 | Traditional Safe Havens Can Disappoint

Savvy investors look for safe places for their money in uncertain times. Canadians consider large companies that pay generous dividends as reliable and safe. Are traditional safe-haven investments likely to perform well this time? Some Canadian companies have paid dividends continuously for more than one hundred years. Bank of Montreal paid dividends since 1829, Bank […]

March 20, 2020 | Timing the Bottom of a Bear Market

A full-blown global recession is inevitable at this point, due to government efforts to contain the spread of COVID-19. The world’s economy was slowing before the pandemic hit. A growth slowdown has now become a widespread economic contraction. Stock markets reacted sharply with most stocks down at least 30 percent, and some large firms in […]

March 13, 2020 | The OPEC Era is Over

The oil supply cartel known as OPEC continues to self-destruct. With the announcement that the Saudi-led group of oil exporters could not reach agreement with Russia the price of oil collapsed. Will OPEC ever regain control of the oil markets? In my weekend note on December 31, 2014 I wrote that OPEC was struggling with a worldwide […]

March 6, 2020 | The Bank of Canada Makes an Emergency Rate Cut

The Bank of Canada (BOC) cut its policy interest rate on Wednesday to 1.25 percent, the first cut in rates since 2015. The drop of 50 basis points was like Tuesday’s move by the U.S. Federal Reserve, which was done as an emergency response to risks related to the impact of COVID-19 on the global […]

February 28, 2020 | Buy the Dip is a Questionable Strategy

The stock market has started to react negatively to COVID-19 spreading outside of China. Markets are down about 10 percent from the peak valuations of mid-February 2020. During a steep correction, it has been profitable to buy stocks. This is called “buying the dip”. Is now a good time to add exposure to the market? […]

February 21, 2020 | Elon Musk Plans to Disrupt Broadband Internet Access

Space-X is launching telecommunication satellites that will become a network called Starlink. Starlink will bring high-speed, low-cost broadband internet to the world, starting in mid-2020. The requirements to use Starlink are the purchase of a pizza-box-sized receiver and a subscription. This service will be especially useful for remote areas outside of big cities that suffer […]

February 14, 2020 | The Stock Market Looks Past the New Corona Virus

The coronavirus that originated in Wuhan, China is causing worry all over the world, as the virus appears to cause severe sickness in about 20 percent of confirmed cases, and death in about 2 percent. The stock market is near record high levels, having taken a mild dip when the virus was first reported, and […]

January 31, 2020 | U.S. Energy Self-Sufficiency is a Game Changer

The U.S. is close to self-sufficiency in energy, which is changing the balance of power in the world’s oil markets. The price of crude oil surged briefly in the first week of January after the assassination of an Iranian general by the U.S. military. But the oil price came down to earth quickly, reflecting the […]

January 24, 2020 | Small Capitalization Companies Overdue for a Bounce in 2020

Large capitalization U.S. companies continued to outperform last year. The Russell Top 200 mega-cap index gained 30 percent last year, while the Russell 2000, a group of about 2,000 companies that average only $2.43 billion market value rose 23 percent. Since 2016, on an annualized basis, the small cap Russell 2000 gained about 8.1 percent, […]

January 17, 2020 | The Climate Change Crisis Hits the Finance World

A new year and a new decade triggers thinking about what the most rewarding investment theme will be over the next year and beyond. A leading candidate for a dominant theme is the impact of climate change risk. Bank of England Governor Mark Carney said that climate change is an example of the Tragedy of […]

January 10, 2020 | The U.S. Obsession with Iran

People are wondering what will happen after the U.S. assassinated a senior Iranian commander, Major General Qassim Suleimani. Iran is a long-time enemy of the U.S., after the hostage-taking of 52 Americans at the U.S. embassy in Tehran and the overthrow of U.S.-backed Mohammad Reza Shah Pahlavi, both events happening in 1979. Is war inevitable? […]

December 20, 2019 | The Trump Impeachment Begins

President Donald J. Trump, 45th head of state, is now the third President since 1776 to be impeached by the House of Representatives of the United States. The next step is a trial to be held in the U.S. Senate, and a vote that will determine acquittal or removal from office. Will impeachment or the economy […]

December 13, 2019 | A Comfortable Retirement is Not Guaranteed

The era of a comfortable retirement funded by defined benefit pension plans is fading rapidly from the scene in North America. Companies and governments offering defined benefit plans are struggling to fund their obligations. Some have even reduced payments arbitrarily for pensioners and most no longer offer a pension to new employees. Was the guarantee […]

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