ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION
January 27, 2020 | ‘Fourth Turning’ of Status Quo Systems and Beliefs Likely to Last to 2030
A slowing global economy with record debt, levered speculators and irrationally valued corporate securities make the world extra vulnerable to negative shocks that inevitably come in the form of trade wars, catastrophic weather events, disasters, war, terrorism and pandemics. Today, we have all of the above in the mix. Importantly, this is all happening within […]
January 23, 2020 | BOC Missing Magic Bullet as Canadian Economy Slumps
The Bank of Canada (BOC) held its policy rate at 1.75% yesterday caught between the rock of slow growth–falling exports, weak business investment, slowing job creation, souring loans, less confidence and lower consumption–and the hard place of precariously indebted Canadian households with little to no savings. The BOC noted that residential investment was a […]
January 22, 2020 | CPP CEO Sounds Alarm on Illiquid Assets
A decade of record-low interest rates has herded capital globally into the same buffet of risky assets. Most of the participants have little cash and many are highly levered. This is a time-tested recipe for forced selling and capital implosion. It won’t be different this time. Unlike individuals, the Canada Pension Fund has the luxury […]
January 21, 2020 | MNP: Half of Canadians on Verge on Insolvency
Canada was relatively sheltered in the 2008 recession thanks to higher home equity and lower household debt heading into the downturn. Not this cycle. And unlike the quick central bank induced bounce back in 2009, the current quagmire is likely to persist longer. The latest MNP Consumer Debt Index published Monday shows 50 per cent […]
January 20, 2020 | Slow Growth and Souring Loans Hitting India Too
I understand from stock bulls that central banks have got all this under control. That’s good, because even India, the world’s fastest-growing large economy, has taken its growth rate estimate for the current fiscal year ending March 31 down to 5%–the slowest growth rate since 2009 and compared with a peak of 8.2% in 2017. […]
January 17, 2020 | Petro-Canada Completes National EV Charging Network
Today, I noticed that this Petro-Canada near our house is now up and running with an EV Fast Charger Station. According to the Petro Canada website, the company has completed a network of charging stations all across Canada, as shown on the map below. You can also search by location to find the chargers in […]
January 16, 2020 | Casinos, Corruption and Crime in Canada
When I was a kid, casinos were only in Vegas and Atlantic City. Allowing them to go mainstream in Canada was a mistake. Corruption and crime are natural byproducts. An exclusive Global News investigation reveals the RCMP’s former Integrated Illegal Gambling Enforcement Team uncovered evidence of illegal activity, such as sexual slavery, child abuse, and […]
January 14, 2020 | Hoisington Q4 Review and Outlook
Hoisington Investment Management has published a Fourth Quarter 2019 Review and Outlook here, and, as usual, it’s worth reading. Here are some key takeaways: The U.S. 30-year Treasury bond yield of 2.39% on December 31, 2019, was the lowest yearly close on the 30-year since its inception in 1977, and the annual average yield for long […]
January 11, 2020 | Re-Steepening Yield Spreads and CEO Sentiment
In our December 31 client letter, we discussed the re-steepening in the US 10-year and 3-month yield spread that has been underway since 2019, as the US Fed began cutting its policy rates once more. An inversion of the 10-year-3-month spread has preceded each of the last eleven US recessions, and in particular, it is […]
January 10, 2020 | Return Prospects are Priced in Whether We Accept Them or Not
Every so often I receive angry messages from blog readers who insist I am wrong to be bearish of stocks and corporate bonds. My first point would be, no one has to read my thoughts. If one is confident in their own investment rules and assessments, they should be content to follow them and make […]
January 9, 2020 | Fed-Induced Debt Bubble Thwarting the Global Economy
Ellen Brown has penned an excellent article on the latest iteration of Fed-funded madness –the now daily repo market injections. Brown and others are calling on lawmakers to turn the Federal Reserve into a public utility and impose a 0.1% financial transactions tax to help curb high-frequency speculative trading, see The Fed protects gamblers at the […]
January 8, 2020 | HBR: Why Stock Buybacks are Dangerous for the Economy
Two of the leading democratic candidate contenders have proposals to greatly curtail share buybacks as a form of illegal market manipulation. Last October the International Monetary Fund’s Global Financial Stability Report, noted “debt-funded payouts” as a form of financial risk-taking by U.S. companies that “can considerably weaken a firm’s credit quality.” This week a Harvard Business […]
January 7, 2020 | Cash-Strapped Boomers Selling Their Homes to Rent
Cash-strapped retirees are increasingly looking to liquidate real estate in exchange for cash and rental accommodations. This trend is likely to continue for the next decade-plus and exert downward price pressure on elevated property markets all over the world. This will be particularly felt in places like North America, where an aging population of present […]
January 6, 2020 | As Australia Burns: Stanford’s Solutions Project Shows Path to 100% Renewable Energy
The Australian Federal Government has so far refused to acknowledge Australia’s exposure to the effects of climate change, arguing the country’s insignificance in terms of global emissions as justification for not developing a climate-action plan that transitions its reliance on fossil fuels towards its abundant renewable resources. “Australia is politically dominated by climate change trivialisers […]
December 31, 2019 | Leaping Finance Costs are Canary in Coal Mine for Highly Indebted Corporate Sector
Over the past 21 months, selling in ‘junk’ grade CCC corporate bonds has pushed their prices down and average yield up from 7.7% in February 2018 to 11.31% by November 2019—a massive 46% increase in borrowing costs for highly indebted companies. Over the same period, the yields on BB bonds rose 11% and BBBs an […]
December 28, 2019 | Lowering Sick-Care Costs Through Healthful Habits
Chronic diseases are the most common and costly of all health problems, and they are also the most preventable. According to the CDC’s National Center for Chronic Disease Prevention and Health Promotion (NCCDPHP), health-damaging but modifiable behaviours like tobacco use, insufficient physical activity, poor eating habits, and excessive alcohol use–are responsible for much of the illness, […]
December 27, 2019 | Financial Shell Game Continues in Full Vigor
Last month, eleven years after the events, a judge in Milan sentenced 13 former executives of three major banks to multi-year prison terms for actions they took to hide trading losses at their institutions in 2008. This is significant since outside of Ireland and Iceland, jail time for the directing minds of financial crimes at large […]
December 25, 2019 | Why is it Hard to Buy Electric Vehicles?
This segment should be called “why is it hard to buy electric vehicles”. The technology is superior to internal combustion engines (ICE) and at least 80% cheaper to run. Moving present policy incentives from antiquated old tech to electric vehicles and renewable energy has an important role to play in making a needed transition here. […]
December 23, 2019 | Former BOC Head Carney Steps into UN Special Envoy on Climate
As chairman of the Financial Stability Board from 2011 to 2018, former Bank of Canada head Mark Carney led escalating requirements for companies to include detailed climate change-related disclosures in their financial reporting to enable better business and investment decisions. Leaving the Bank of England in January, Carney is continuing the push for financial accounting […]
December 20, 2019 | The Dark Side of Electronic Waste Recycling
Electronic waste is a hazardous and difficult form of garbage to manage. Though a lot of e-waste can be recycled responsibly, many e-waste processors choose instead to ship it overseas for junkyards in poorer nations to deal with. Remarkably, exporting e-waste is perfectly legal in the US…but thanks to a scrappy nonprofit watchdog, some unscrupulous […]
December 19, 2019 | Ontario Investors Missing Millions in Paramount Equity Collapse
Another day, another tragic story about too-good-to-be-true return hopes, financial loss and devasted life plans. Ten percent is not a sustainable return objective, and far too risk-seeking for retirement funds. Yet many people still make such presumptions. This is a reliable path to pain and suffering. Read How 500 Ontario investors may have lost millions in […]
December 18, 2019 | Typical Investment Behaviors Lead to Typical Losses
A decade-long expansion in financial markets driven by relentless central bank largesse and corporations ploughing in cash to bid up their own shares has come at a heavy cost. Not only have extreme valuations and slowing growth wrought anemic and negative-yielding assets all over the world but equities, corporate debt and real estate in many […]
December 17, 2019 | Goldman Sachs (finally) Urges Carbon Pricing and Action on Human Sustainability
This week, Goldman Sachs joined more than a dozen of the world’s largest banks in announcing policy changes to help human sustainability, including that it will no longer finance new oil projects in the Arctic where President Donald Trump and others have sought to expand development. In short, Goldman has acknowledged that destroying the ecosystem, on which we […]
December 16, 2019 | Lower Operating Costs Drive Push for Electric Planes
Full-cost accounting of pollution and emissions are set to dramatically escalate the cost of air travel and pressure profits in the low-margin sector. Now, plane manufacturers and operators are seeing every reason to go electric. See Rolls-Royce thinks it can make a plane Greta Thunberg would fly in: Rolls-Royce has partnerships with Airbus and other players […]
December 13, 2019 | After the Boom: Secular Rightsizing continues in Canada
Where business cycle downturns can last a couple of years within a longer-term secular uptrend of higher highs over time, a secular downturn typically lasts 15+ years in a grind to lower and lower lows that finally expunge the excesses of the secular boom. After the 16-year secular upcycle in Canadian debt and real estate […]