- the source for market opinions


August 19, 2019 | Rosenberg: Global Recession Coming, No Quick Path Out

“This is going to be a capital-spending-led recession,”Rosenberg, the senior economist and strategist at Gluskin Sheff + Associates told BNN Bloomberg in an interview on Thursday. “The consumer will follow like a domino…. “We don’t have the traditional fiscal, or, certainly monetary policy bullets anywhere in the world to fight the next recession,” he said. […]

August 17, 2019 | Markopolos: GE Accounting Fraud Larger than ENRON

After a year-long investigation, renowned Madoff whistleblower and financial analyst Harry Markopolos and company have released a 175-page report to regulators declaring General Electric guitly of the largest insurance fraud ever.  The report alleges that GE has a “long history” of accounting fraud, dating back to as early as 1995 when it was run by […]

August 16, 2019 | Oil and Credit Strains Leading Banks and TSX Lower

Rising precious metals stocks this summer have, so far, managed to hold the Canadian stock market (TSX) above the 16,000 level where it has languished, flat since 2017.  Material stocks, however, make up just 10% of the index overall. Energy stocks, the second-largest sector weight at 19%, have been losing since oil prices hit a […]

August 15, 2019 | GM and VW Double Down on EVs (at last)

After making the dumb business decision to crush its much loved ahead-of-the-pack electric cars (EV1) in 2002, GM, along with emission-fraud leader VW, finally, see where the puck is going.  Chinese regulations requiring companies to sell a minimum number of zero-emission vehicles to avoid financial penalties are a huge catalyst. Ford and Toyota are, so […]

August 14, 2019 | Capital Losses Defeat Investment Return Dreams

In finance theory, expected returns presume a closed universe of compound growth where the income received on assets is continually reinvested without any fees, withdrawals, taxes or principal losses to reduce net gains.  In reality, all of these are regularly recurring facts of life for most. As I explain (ad nauseum?) money is like a […]

August 13, 2019 | Debt Weight on the Young is Impediment for Economy Overall

A new study from Hoyes, Michalos & Associates Inc:  ‘Student Debt Crisis – a Generation Buried in Student Debt’ finds student debt contributed to 17.6% of Ontario’s reported insolvencies in 2018, and a record over the firm’s nine years of collecting such data. Factors cited behind the insolvency “epidemic” are high tuition costs and an increased […]

August 10, 2019 | Japan Shows How ZIRP and NIRP Policies Decrease Financial Viability

As North America moves near zero (ZIRP) and possibly negative policy rates (NIRP) in the months ahead, Japan remains the leading test case for these experiments, and investors would be wise to take note.  Nearly 30 years of zero and negative interest rates and asset buying by the Bank of Japan, and government debt has […]

August 9, 2019 | Lower Interest Rates are Symptoms, Not the Cure

The New Zealand central bank slashed its official cash rate by a third today–to one percent–and twice as much as expected. In response, the New Zealand dollar (NZD) slumped nearly a percent and is back under .65 per U$.   The NZD bottomed the last cycle at .48 in the spring of 2009.  Entering this global […]

August 8, 2019 | Battery Powered Ships on Deck

Four Japanese companies are building the world’s first zero-emission tanker to be completed mid-2021, powered by large-capacity batteries.  See Battery-Powered ships next up in the battle to tackle emissions: While fully-electric ships have struggled to penetrate major markets, momentum is gathering. Rolls-Royce Holdings Plc said last year that it had started offering battery-powered ship engines, while Norway’s […]

August 7, 2019 | Cash Shortages Drive Asset Selling in Heavily Levered World

As the longest and most levered expansion cycle in history draws to its inevitable close, a world that borrowed heavily in US dollars over the last decade now becomes shorter and shorter of the currency needed to pay their bills. The bulk of global debt (over $244 trillion-plus today) is owed in US dollars. (See Global […]

August 6, 2019 | ‘Easy’ Money is No More

Our July 31st client letter focused on the history of modern monetary policy and what impacts we should expect next.  Last week’s NY Times article “Why we should fear easy money” is also on point.  Just one key takeaway is this: “Recessions tend to be longer and deeper when the preceding boom was fueled by borrowing, because […]

August 1, 2019 | Rate Cuts Coming to Canada Too, But More Will Be Needed

On this first day of August 2019, a day after the US Federal Reserve blinked and launched into its first rate-cutting cycle in a decade and abandoned plans to run down its QE-bloated balance sheet (via QT), it will not be long before the Bank of Canada follows suit.  Some key themes are driving the […]

July 31, 2019 | Permanent and Cyclical Shifts Undermining Oil Demand

Most of the plastics presently in use are made from crude and are not recyclable and non-biodegradeable.  Most people are just realizing this now. As word spreads, banning plastic straws and bags are barely a beginning.  Much broader bans and demands for reuseable and biodegradable packaging types are inevitable because doing otherwise makes zero sense […]

July 29, 2019 | Improbable, High-Risk Return Assumptions Increase Odds of Financial Hardship

The average US public pension plan (similar in Canada) is assuming it will net an average 7.4% annually going forward. Even on that rosy presumption, the average pension today has a 27% capital shortfall and 73% of the assets needed to fund payouts promised to retirees. To meet planned withdrawals, most retirement plans–pensions and individuals–need […]

July 25, 2019 | Top 10 Countries by Exports 1970 to 2017

This clip offers a useful glimpse of the ebb and flow of global exports and economies over the last 46 years. It also gives a sense of who has most to lose during trade wars and a period fixated on deglobalization. When exports retrace, the relative income of households within each country becomes even more […]

July 24, 2019 | Phones and Junk Food: Two Addiction Epidemics Needing Attention

I take public transport wherever possible and, in doing so, have the opportunity to observe the epidemic of compulsive phone and junk food consumption.  A large and growing body of scientific studies connect the two in brain chemistry and the rising tide of diet-related illness, anxiety and depression. Yesterday I had a two and a […]

July 23, 2019 | The Compounding Costs of Unaffordable Shelter

A time-tested ratio for affordable housing is total costs amounting to 30% (max.) of a household’s pre-tax income.  For the one-third of Canadian households that rent, rent and utilities are a ‘severely unaffordable’ 50%+ of household income in all ten Canadian provinces today.  Also see the Visual Capitalist graphics in Countries with the highest housing bubble risks, […]

July 22, 2019 | McKinsey: Autonomous, Electric Vehicles will Change the World

A new report from McKinsey & Company concludes that autonomous driving and vehicle electrification are the next big shift in human mobility and will change the world.  See Automonously driven, electric cars will change the world, McKinsey says: “When we think about the next inflection point of mobility we think we’re really at the point where […]

July 20, 2019 | Transport Weakness Confirms Cyclical Downturn Underway

As I pointed out in Transports leading the stock market and economy lower, the Dow Transport Stock Index has not confirmed strength in the broad market indices since December 24th. In fact, the transportation index is at the same level today it as it was in December 2017. Large cap companies can fabricate earnings growth through […]

July 18, 2019 | Canadian Government Bonds Rising as Growth Stalls

The government bonds in our portfolios have appreciated for many months now as economic data disappoints and central bank rate cuts come to fruition once more. Although the Bank of Canada (BOC) is presently on hold, rate cuts by the US Fed will force the BOC to follow suit.  The rally in government bonds is […]

July 17, 2019 | Driving an EV is Cheaper

The most compelling argument for owning an electric vehicle is they cost much less to run than ICE (internal combustion engines). On average they are about 94% cheaper to fuel, 25% cheaper to insure, and 90% cheaper to maintain. With a fraction of the engine parts to replace, repair and maintain, they also tend to […]

July 16, 2019 | Global Debt Approaches Record 320% of GDP in Q1 2019

The consensus, in retrospect, now agrees that the Great Financial Crisis was a product of indiscriminate lending, speculation and too much debt. Today, though, they see no such problems.  Record asset valuations and debt are no longer of concern because central banks are viewed as magicians once more.  A revelation will only come after a […]

July 15, 2019 | North Americans: World Leaders in Oil Production and Consumption

With the world population doubling in the last 50 years, energy demands, sources and technologies are in a rapid growth phase.  It is useful to understand from whence we come.  For a detailed and balanced review of Canada’s oil history, I highly recommend Calgarian Chris Turner’s award-winning book The Patch:  The People, Pipelines, and Politics of […]

July 12, 2019 | New Easing Cycle Not Bullish for Corporate Securities

US Fed Chair Jerome Powell stoked hopes for imminent rate cuts on Wednesday, acknowledging that global growth remains far below the Fed’s forecasts in 2019. While large-cap shares levitated on prospects of a further reduction in borrowing rates, other economically sensitive markets like small and mid-cap, transportation, bank shares and government bond yields, are not […]

July 11, 2019 | Fleeting Growth at the Price of Stability: The Fed’s Conflicting Mandates

When Congress passed the Humphrey-Hawkins Full-Employment Act in 1978 it added ‘full employment’ as a second and conflicting mandate to the original goal of price stability.  This seemed like a good idea to those unrealistically seeking perpetual economic expansion.  In reality, it was our present endgame in the making. The full employment goal favored constantly […]

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