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June 20, 2019 | Canadian C-Suite Squandering Cash in Buyback Mania Too

Further to my article yesterday on the capital malinvestment in record corporate buybacks at cycle high valuations in equity markets, the Globe and Mail reports that corporate buybacks of TSX-listed companies also reached an all-time high of nearly $50 billion in the 12 months ending March 31, 2019, and nearly 50% higher than the previous mania […]

June 19, 2019 | High Fees and Risky Bets Not in Best Interests of Canadians

Andrew Coyne points out some startling figures about the Canada Pension Plan on which the majority of Canadians depend for retirement income.  See Canada Pension Plan gets lucky with active management, for now. Here are some key takeaways: Switching to a new ‘active’ management strategy in 2006,  the number of Canadian Pension Plan Investment Board (CPPIB) employees […]

June 18, 2019 | Corporations Biggest Net Buyers of Stocks Since 2014

Who in the world has been buying stocks at increasingly speculative-grade valuations over the past five years?  As charted below, the biggest net buyers have been public corporations themselves as management used liquidity driven by central banks to buy back shares and drive their prices higher.   Not only has the activity fabricated the majority […]

June 17, 2019 | Oil Supply Swamping Demand

I am just finishing Chris Turner’s important book The Patch: the people, pipelines and politics of the oil sands.  Every Canadian could benefit from reading it and learning more about this history and what present challenges import for Alberta and the Canadian economy going forward. Even while optimistically assuming that the global economy strengthens rather than […]

June 14, 2019 | Hemp: A Biodegradable Replacement for Many Petrochemical Materials

Naturally-occurring, hemp can be used to manufacture many biodegradable products to replace those presently derived from petroleum, such as plastics. See Industrial Hemp is the answer to petrochemical dependency: Industrial hemp, not to be confused with marijuana, was recently removed from the federal government’s schedule of controlled substances in the 2018 Farm Bill. The crop can be used to make […]

June 13, 2019 | Exporter and CEO Optimism at Recessionary Lows

Canadian exporters are reporting widespread concerns about a global recession, with sentiment in the sector falling to the lowest level in seven years, according to a  survey by the country’s export financing agency. Export Development Canada’s trade confidence index, a composite gauge based on a bi-annual survey of 1,000 businesses, dropped to 69.8, compared with […]

June 12, 2019 | ‘China Bad Debt Approaching 25% of Total Credit’

I have long noted that the leverage, securitization and off-book accounting gimmicks that imploded enery-giant-ENRON in the early 2000s were adopted far and wide over the last 20 years.  Bailouts to those instrumental in the 2008 implosion, along with central bank liquidity-pumping globally, enabled a continuation of similar antics in the last decade, and particularly […]

June 11, 2019 | Households Vulnerable Amid Global Downturn

  In terms of relative household debt levels, Canadians measured as more financially prudent than US households heading into the 2008 recession–that was then.   Today, as shown beside, Canadians are world leaders in financial imprudence with both record high debt and near-zero saving rates (in red below, versus US savings rate in black). Being […]

June 10, 2019 | Lower Prices Necessary to Restore Housing Affordability

Hilliard MacBeth, author of “When the Bubble Bursts.” joins BNN Bloomberg for his take on the B-20 mortgage stress test and why Canadians may need stricter requirements in order to avoid a real estate crash.  Here is a direct video link.  

June 7, 2019 | World Oceans Day: Time to Act on Plastics

Tomorrow, June 8, is World Oceans Day.  Fossil-fuel based plastics are degrading all our water systems, but many people are not yet appreciating the threat to human health. See Microplastics have invaded the deep ocean–and the food chain. University of Victoria research estimates that individuals are already consuming 39000 to 52000 microplastic pieces per year through our […]

June 6, 2019 | Ask Your Financial Advisor to Sign a Pledge of Fduciary Duty to You

The SEC caved to the broker/dealer lobby again yesterday (See SEC’s so-called best-interests rule is a fraud, that protects industry profits, not investors) and refused to hold everyone giving investment recommendations to a fiduciary standard of care. It is past time for clients and customers to take self-protection into their own hands.  Help yourself and your […]

June 5, 2019 | Rate Cuts Resuming in 2019, but Oz is No More

Yesterday, as stocks celebrated odds of US Fed rate cuts in 2019, a World Bank report reduced its semi-annual forecast for global growth to 2.6%–from 2.9% at the start of the year—and slashed its forecast for growth in trade to 2.6% from 3.6%.  This downgrade did not include further weakness from an additional 25% US […]

June 4, 2019 | Repeating Behaviors in Real Estate Boom/Bust Cycles

In explaining why highly levered, speculative cycles are so damaging to balance sheets and financial stability, I often reference the reality that when asset bubbles burst, prices drop and debt level rise, evaporating net worth rapidly and intensifying selling pressure. The graphic below captures the point within the context of housing.  Of course, the same […]

May 31, 2019 | Worthwhile Read: The Fifth Risk

I just finished Michael Lewis’s latest book, The Fifth Risk: Undoing Democracy. Lewis examines key US government departments like Agriculture, Commerce (which should be called the ministry of data on things like weather and food production), and Energy. He describes the many vital duties these departments are responsible for, and what happened when the Trump administration […]

May 30, 2019 | Risk-Markets Take a Thumping in May

Risk assets have taken a fresh thumping in May.  As of last night, the S&P 500 index was down 5.5% on the month, with energy (-9.2%), technology (-8%), materials (-7.4%), industrials (-7.1%) and financials (-5.6%) faring worst, and so-called ‘defensives’: real estate (-.05%), utilities (-1.6%), health sick care (-2.3%) and consumer staples (-2.9%) faring less bad, as […]

May 29, 2019 | How Electric Vehicles Work

This ten minute primer is well done.  Regenerative braking is one of the coolest parts. Electric cars are making big waves in the automobile world. These noise-free, pollution-free and high-performance vehicles are expected to make their I.C. engine counterparts obsolete by 2025. This video will unveil the hidden technologies behind the Tesla Model S, which […]

May 28, 2019 | EV Cost Savings for Consumers are Compelling Here and Now

Electric vehicle (EV) battery prices fell 84% between 2010 and 2018 as their range doubled.  As ratios continue to improve, industry analysts now forecast that EVs will cost less to buy than gas and diesel-powered versions in less than five years. Yes, a bus pass is cheaper, but for those who still want or need […]

May 22, 2019 | The Truth About Lump Sums: Most People Screw Them Up

Here’s a sobering stat from the National Endowment for Financial Education:  70% of people who suddenly receive a large amount of money go through it all in just a few years.  This is the reality, whether funds come from the sale of a business or real estate, stock picks, the lottery, an inheritance, or other windfalls. Classic errors […]

May 21, 2019 | Loose Lending Standards are the Cancer not the Cure

The Bank of Canada (BOC) last week flagged the fragile nature of highly indebted Canadian households and said 42% of households would struggle to refinance their mortgage if home prices fall 20%.  While mortgage and real estate brokers are calling for a re-softening of lending standards in the face of housing weakness, BOC head Stephen […]

May 20, 2019 | Australia Leads Canada in Mean Reversion of Household Leverage Bubble

Seeing reality and recognizing self-destructive behaviour in others is usually easier than seeing our own.  Canadians have an opportunity for objectivity in observing Australia.  Many similar factors are weighing down the Australian and Canadian economies today as their shared 2001-2011 commodities boom cycle and 2002-2017 secular real estate/credit expansion proceed through an equal and opposite […]

May 17, 2019 | Industrial Commodities and the Canadian Loonie

This clip offers a good review of the close linkages between non-exchange traded commodities (driven more by global demand than financial market speculation), the Canadian dollar and the North American economy. Lakshman Achuthan, COO of the Economic Cycle Research Institute, discusses risks of a global economic slowdown and its impact on commodities demand from Canada. […]

May 16, 2019 | Impossible-To-Repay loans are Not Legitimate Financial Services

As I explained in The indefensible predatory business of payday loans, criminal interest rate caps stood for many years in both Canada and the United States at 60%. The financial lobby had governments carve out workarounds in the last decade, and impossible-to-repay rates–often compounding to several hundred present annualized–have enabled credit enslavement to go mainstream since. Capping […]

May 14, 2019 | Quantifying ‘Wealthy’ and the Capital Value of Income Streams

A recent Charles Schwab study asked different age groups to estimate the net worth needed to feel ‘wealthy’ where they live.  Not surprisingly, the amount estimated was higher for those aged 50+ than those in their 20’s–older folks tend to have more carrying costs and obligations.  See:  How much money do you need to be wealthy […]

May 13, 2019 | Amazon Re-Purposing Malls it Helped Vacate and Widening Tax Deficits in the Process

Two decades of easy credit and hyper-consumption from North American households have encouraged a massive overbuild in the retail sector and commercial real estate. In the process, retail–which includes on-line giants like Amazon, eBay, big-box chains, and smaller brick and mortar entities–became the largest North American employer accounting for 12% of Canadian, and 10% of […]

May 11, 2019 | Understanding Relative Bargaining Power in Trade Negotiations

For an important historical perspective on the tensions playing out between China and other trading partners today, I recommend reading ‘How Asia Works.’ Other numbers to illuminate the relative bargaining power between China and the US are that US exports to China make up just .55%, and imports from China just 2.38% of America’s GDP, while […]

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