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May 28, 2025 | Denmark Finds Courage to Act on Needed Entitlement Reform

Denmark raised its retirement age last week to 70 for Danes born in 1971 or later. Workers currently become eligible for the Danish equivalent of Social Security at age 67, which will go up steadily in the coming years. See: The New Retirement Age in Denmark is 70: This is the result of a reform passed […]

May 27, 2025 | Mean Reverting Prices are Contagious

During the pandemic, near-zero interest rates and government subsidies enabled excess consumption beyond sustainable means. That inflated the prices of most goods and assets while exacerbating wealth gaps between the old and young, as well as between the top ten percent and the rest. We are now in a mean reversion phase, and the downward […]

May 23, 2025 | Vacation Plans Shrink with Consumer Confidence

According to the University of Michigan’s preliminary May survey, the U.S. Consumer Sentiment Index fell to 50.8, down from 52.2 in April. This marked the second-lowest reading in the survey’s nearly 75-year history, surpassed only by June 2022. The decline is attributed to heightened concerns over inflation and the economic impact of President Trump’s trade policies. Notably, 75% […]

May 22, 2025 | Yes, You Can Lose Money in Real Estate

In the ‘easy-money’ ultra-low rate era, there was a lot of demand from secondary property owners for recreation or renting to others. Most were over the age of 50. An increasing number will look to sell to lower overhead/upkeep and free up cash flow in retirement. The good news is that this will continue to […]

May 21, 2025 | Retail Gone Wild (Encore)

The S&P 500 risk premium—forward earnings yield minus the 10-year Treasury yield—is once again about zero (below since 2000, via The Daily Shot). Such dismal equity risk-reward prospects have only been seen once in the last quarter century and that was coming out of the 2000 bubble top. The large cap S&P 500 went on […]

May 20, 2025 | Summer of Discontent

In April, Canada’s unemployment rate rose to 6.9%, the highest since September 2021 and 210 basis points above the July 2022 cycle low of 4.8% (shown below since 1950).     Beata Caranci, chief economist at TD Bank, expects a recession in the coming quarters and another 100,000 job losses by the fall. See, Canada’s economy […]

May 16, 2025 | Food and Energy Innovation are Here to Help

We recently completed rooftop solar, which allows us to run operations and vehicles on sunshine. Technology is here to improve efficiency and lower waste for all sectors of the economy—a much-needed bright spot ☀️. Smart food production powered by renewable energy is what productivity enhancement looks like. For the first time, a King City, Ont, greenhouse […]

May 15, 2025 | Housing Bust and Tariffs Hitting Highly Leveraged Economy

The spreading downturn in real estate is the typical and foreseeable mean reversion of the speculative mania that prevailed through the years of near-zero interest rates. The condo market in two of Canada’s big cities has taken a major downturn. CBC’s Nisha Patel breaks down three reasons why condos aren’t selling in the middle of […]

May 14, 2025 | Mayhem continues

A 90-day pause on embargo-style US-China trade tariffs has revived bullish spirits. The large-cap S&P 500 (black below), with its one-third weight in tech companies (“Magnificent Seven” companies in orange), has rebounded 18% since April 8—now flat year to date and -3.8% below the February high. The retail crowd is back at it, bidding the […]

May 13, 2025 | Canadian Unemployment Looking Even More Recessionary

The Canadian unemployment rate rose to 6.9% in April (from 6.7% in March). Outside of the 2020 COVID shutdown, this was the highest level since January 2017 and up 210 basis points from the July 2022 cycle low of 4.8%. This is a warning sign: in past cycles since 1953, we have been six months […]

May 12, 2025 | Housing Downturn Accelerates in April

TRREB is Canada’s biggest real estate board, covering the Greater Toronto Area (area codes 416 and 905, as shown below), which has the largest population concentration in Canada. TRREB just posted April numbers (here); year over year, single-family home sales were down 22%, and condo sales were down 30%. An hour or so in each […]

May 8, 2025 | Fed Sits Tight as Economic Hits Keep Coming

Yesterday, the US Federal Reserve held its policy rate steady at 4.25%–4.50%, as Chair Jerome Powell admitted he doesn’t know whether rising inflation or surging unemployment will hit hardest. In the meantime, indebted businesses and consumers feel the pressure of interest rates near multi-decade highs. A larger share of student loan balances are past due […]

May 7, 2025 | Trade-War Pain Spreading

China’s economy showed signs of damage from the trade war in April, with a drop in export orders and the weakest production at the country’s factories in more than a year. See, Beijing doesn’t want America to see its trade war pain Here is a direct video link.  The impacts are evident in America, too. Port of […]

May 6, 2025 | Lacy Hunt: Five Recessionary Forces

Dr. Lacy Hunt, Chief Economist at Hoisington Investment Management, analyzes what he calls an economic “interregnum” where five convergent forces are aligning to depress growth. Dr. Hunt methodically explains how tariffs will ultimately prove deflationary rather than inflationary, why the Fed’s restrictive monetary policy is misplaced, how federal spending cuts are creating headwinds, why massive […]

May 5, 2025 | Cash-Strapped Investors Borrowing Against Illiquid Funds

During the highly unnatural, central bank-imposed years of ZIRP ‘zero interest rate policy’, investors were increasingly attracted to ‘alternative’ illiquid, opaque, securities that did not mark to market and promised future payouts premised on an endless supply of greater fools who would buy off existing holders. Some funds have been marketing theoretical return data, not […]

May 2, 2025 | Household Struggles Weigh on Real Estate and Spending

A surge in active listing supply and an increase in price reductions failed to lure more homebuyers off the sidelines in April, as US pending home sales dropped for the fourth consecutive month (chart below via Realtor.com®). See, Supply of Homes for Sale Hits a Post-Pandemic High in April—but Pending Sales Drop as Buyers Grapple With Economic Uncertainty: The […]

May 1, 2025 | Serious Question: How Long is Our Run?

Equity prices have made some ‘mean reversion’ progress year-to-date. At the end of March, the average geometric valuation for S&P 500 companies had declined to 148% from 167% in February (below since 1900, courtesy of Advisor Perspectives). This was the lowest since June 2024, but still, the most expensive in history and three standard deviations […]

April 30, 2025 | Rocks and Hard Places Leave No Easy Out

This morning, the first quarter 2025 US GDP estimate disappointed with a -0.3% annualized contraction (vs. -0.2% annualized estimate). At the same time, US consumer confidence surveys show future expectations at a 14-year low (below via Bloomberg, see US consumer confidence slumps). All three expectation components — business conditions, employment prospects, and future income — deteriorated […]

April 29, 2025 | US Imports from China Plunge

Gene Seroka, Port of LA executive director, joins ‘Squawk Box’ to discuss the impact of tariffs on U.S. imports and shipments, impact of new tariffs on Chinese goods on shipments from China, tariff impact on retailers, and more. Here is a direct video link. It takes about 30 days for container shipments to go from China […]

April 28, 2025 | Risk-off Following Familiar Pattern

 The extremely over-valued, tech-concentrated US stock market has been a bug in search of a window for a long time.  Trump’s chaos is accelerating an inevitable mean reversion that started with the bursting of the AI bubble on China’s DeepSeek news on January 10th. Year to date, the US market has been underperforming international stock […]

April 25, 2025 | Student Debt Problems are Contagious

According to the Education Data Initiative report, the total outstanding debt in US student loans (federal and private) is a record $1.77 trillion for more than 42 million borrowers. The average debt of a federal student loan borrower is about $37,853, with those aged 50 to 61 having the highest average debt at $46,790.  Debt levels vary […]

April 24, 2025 | Retirement Funds in Trouble

Unfortunately, many individuals and pensions hold high, inappropriate financial risk that pays rich fees to ‘advisors’ and product creators.Clients can be hard to help as they often prefer the ‘good news’ touted by sell-side wizards over sober, fiduciary assessments made from the perspective of capital protection and longer-term best interests. This is especially true when […]

April 23, 2025 | Bear Market Drivers Intact

Risk markets are staging another bear market bounce on Trump’s latest statement that he does not intend to fire Fed Chair Powell. They are also negotiating with China. These things pass as good news today, but the macro picture continues to deteriorate. US capital expenditure plans and new orders (black lines below since 1985, courtesy of The […]

April 21, 2025 | Cashing out of America is Hard on Everyone

Erratic announcements from the Trump administration continue to spook an exodus of capital from asset markets. This morning, the trend intensified following Trump’s latest threats to fire the Federal Reserve Chairman for failing to lower the US overnight rate fast enough. In a speech last week, Fed Chair Powell reiterated concerns that the US core […]

April 17, 2025 | Leverage magnifies up and then down cycles

Buying assets with high loan-to-value ratios tends to magnify price cycles up and down. Leveraging assets like principal residences to get downpayments for other assets leads to a daisy chain of woe for owners, lenders, and the economy. We’re there, and unfortunately, we’ve earned a whopping correction cycle. Today’s interview features Ron Butler, principal broker […]

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