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April 19, 2019 | The Money Illusion and Housing Corrections

A quirk from the field of economics, called the ”money illusion,” will play a big role in the housing market correction now underway in Canada. This correction, which I predict will become a crash, will be very different from the large correction in the 1980s. How does the money illusion work? How will it make […]

April 12, 2019 | Surviving the Canadian Real Estate Crash

The great Canadian housing correction is well underway. Reports of declines of greater than 20 percent in single family home prices in Toronto and Vancouver are widespread, especially in the more expensive segment of the market. Large supplies of new homes in Calgary and Edmonton are sitting unsold due to a lack of buyers. My […]

April 5, 2019 | The Baby Boomer Retirement Crisis

Powerful demographic trends will impact investment markets starting very soon. The demographics behind these trends have been in place since 1946, but their potential for disruption is often ignored while more short-term factors are studied. How will the rapidly aging population in the developed world impact financial markets? I wrote about this as it relates […]

March 29, 2019 | Elon Musk Keeps Rolling the Dice with Tesla

Tesla announced a new, all-electric model, called the Model Y, appealing to the light truck/crossover/SUV segment, the largest component of auto sales. The Model Y shares the same platform as Tesla’s best-selling sedan, the Model 3. There are many skeptics expecting Tesla to fail. But the company keeps growing and even made a small profit […]

March 22, 2019 | Hard Brexit on the horizon

Prime Minister Theresa May faces her biggest challenge as leader next week as MPs are to vote again, for the third time, on the Withdrawal Agreement (WA) negotiated with the EU. The EU granted a brief extension to the March 29 deadline but imposed a condition that the Parliament must agree to the WA next […]

March 15, 2019 | Leave the Canadian Housing Correction Alone

Canadian lending institutions have provided credit under a relaxed set of rules that resulted in Canadian households being recognized by agencies such as the Bank for International Settlements as among the most indebted in the world. Changes in regulatory guidelines have tightened the rules, making it more difficult for Canadians to borrow to purchase homes. […]

March 8, 2019 | The Bank of Canada Gets Cold Feet

The Bank of Canada (BOC) announced that interest rates would remain unchanged, continuing its stance in January 2019. The media release emphasized the economic slowdown, both in Canada and globally. It appears the BOC is changing to a “glass half-empty” point of view. As the March 6, 2019 release said, “the slowdown in the fourth […]

March 1, 2019 | Hidden costs of ETF investing

Index investing, or passive investing, is taking over from the human portfolio manager, also known as active management. This trend is gaining momentum and will not reverse until the next bear market. Individuals now expect above-average returns with high liquidity and low risk, and, most importantly, the lowest fees on the street. Providers of index […]

February 22, 2019 | The Fed is Afraid of Causing a Recession

Since 2008 no central bank has been able to increase interest rates by more than 2 percent without taking a break. The Federal Reserve released the minutes of their January 29-30 meeting that reveal an abrupt change of direction, as they state that more increases in interest rates are not needed at this time. If […]

February 15, 2019 | Australian financial crisis

Australia avoided the worst of the 2009 worldwide financial crisis by pumping up the residential real estate industry. House prices rose, household debt levels soared, and the economy did very well. Is Australia on the brink of its first recession since the 1990s? Does it mean a housing crash is inevitable? Source: Bank for International […]

February 1, 2019 | China Could Use Autos to Boost Slowing GDP

China is the most important emerging market economy. December data show a slowdown in growth there, sending a chill through world stock markets. One of the key sectors in China is the auto sector, as dozens of domestic companies compete in manufacturing vehicles. Volkswagen and GM also consider China a key market. But the auto […]

January 18, 2019 | China Offers Big Potential Returns with Even Bigger Risks

Some of China’s stock market indices showed some of the worst performance in the world over the last year. The Shanghai market fell 24 percent while the Shenzhen market plummeted 32 percent. Trade uncertainty, slowing economic growth in China and a crackdown by the Chinese government on shadow banking all contributed to this sell-off. But […]

January 11, 2019 | The BOC Goes on Pause for Now

The Bank of Canada released its Monetary Policy Report this week along with an announcement that the Bank of Canada target rate would remain unchanged. But in the media release Governor Stephen Poloz insisted that rates are too low and further hikes will be necessary, “over time”. Will the Bank of Canada keep hiking rates […]

January 4, 2019 | The Surprising Plunge in the Price of Oil

The price of crude oil (WTI) plummeted from a peak in early October of more than $75, to a bottom near the end of December below $45. This rapid plunge was surprising as OPEC announced production cuts of 1.2 million barrels per day and even Alberta kicked in with government-mandated cuts of 300,000 barrels per […]

December 21, 2018 | The End of the Greenspan Put

The Federal Reserve open market committee hiked rates again. The stock market didn’t like what Fed chair, Jerome Powell, said at the news conference on Wednesday, and what he didn’t say. Since 1987 when then chair of the Federal Reserve, Alan Greenspan, rescued the stock market after a 20 percent drop, the Fed has been […]

December 14, 2018 | The China-U.S. Conflict Takes a Nasty Turn in Vancouver

The arrest in Vancouver of a senior officer of Huawei highlights a U.S.-China conflict that could affect investors. Most of the recent US-China articles focus on their so-called trade war. And struggles over trade policy affect stock markets. If it looks like there’s a truce, the market rallies. If there’s evidence of new conflicts, the […]

December 7, 2018 | Alberta Tries to Save the Oil Sands

The Government of Alberta ordered producers to cut their production of heavy oil by 8.7 percent on January 1, 2019. Claiming to represent the “owners of the resource,” the Notley government decided on this extraordinary intervention into the market. The restriction of supply is expected to make prices rise. Will the heavy hand of government […]

December 1, 2018 | Disruptive Change Happens Fast

Significant technology-related disruption often seems to appear suddenly. Rapid change can impact people’s lives in ways that can’t be predicted. Large impact events are small specks on the horizon now but could loom large in a few years. It’s interesting to look at those distant threats and opportunities and guess which will become permanent. What […]

November 23, 2018 | Canada and OPEC Face New Competition in Oil

Surging U.S. oil production puts energy exporters at risk. Canada and OPEC are on the spot as new oil production from Texas shale formations surpasses even the most optimistic forecasts. Does the increase in U.S. production spell the end for OPEC? What about Canada’s role as lead exporter of crude oil to the U.S.? The […]

November 16, 2018 | A Messy Brexit Means Opportunity

Brexit is in the news again, as a possible November/December summit between the EU and the UK nears along with the March 29, 2019 Brexit deadline. There are many possibilities for next steps in the Brexit saga, including an agreement on Brexit terms in November or December, a November crisis over Brexit terms leading to […]

November 15, 2018 | Volatility is Good for Value Investors

World stock markets are experiencing unusual volatility during 2018, and some markets, like China, are down more than 20 percent from the start of the year. Political upheaval in the U.S. and Europe is nearly a certainty in 2019, as U.S. election results are bound to lead to more confrontation between the White House and […]

November 2, 2018 | What Four Decades in the Investment World Taught Me

An anniversary marking 40 years for me as an investment advisor arrived on November 1 this week. When I started as a stockbroker in 1978 I remember calling people to talk about Canada Savings Bonds that earned 9.5% interest. Since then bond yields have shrunk to low single digits but stock market gains, especially in […]

September 28, 2018 | Investment Ideas from the September 2018 BCA Conference

BCA Research’s annual conference delivered some great investment ideas this year, over two jam-packed days, to an audience of about 300 portfolio managers and investors from all over the world. There were some surprising forecasts, in an environment of heightened uncertainty in the world. This conference, organized by one of the world’s top macro research […]

September 21, 2018 | No One Saw It Coming

Recent news articles focused on the tenth anniversary of the Lehman Brothers failure and the global financial crisis that followed. A theme runs through much of the commentary; that no one could have foreseen the 2008-09 crisis. That narrative is wrong. There were some who forecast the 2008 financial crisis, in writing, with analysis to […]

September 14, 2018 | When the Bank Decides

Recently I attended The Oxford Central Banking Senior Executive Programme. Five days of presentations and discussions reinforced my understanding of the process of creating money — 97 percent of money has been created by commercial banks when they make loans. Some of the experts that presented at the conference discussed the implications of the money […]

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