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December 10, 2018 | Musk, History and Energy Efficiency

As Elon Musk was interviewed on 60 Minutes last night, it was disappointing to see how little prep work the show producers had done on Tesla, its mission and founder. Musk does not pretend to be perfect or ideal.  He has made mistakes and will make more, no doubt.  He has also attempted more and accomplished more, […]

December 6, 2018 | The Truth About Jellybeans

Ok, time for a refresher on financial basics 101:  The vast majority of finance and advice/management firms are designed to collect the highest fees on capital allocated to the highest-risk asset classes and products; hence the business model is to keep people long the highest-fee asset classes at all times.  This is the case even […]

December 5, 2018 | The Bank of Canada Blinks–What’s Your Plan?

As we suspected it would, the Bank of Canada paused this morning in its rate-hiking aspirations, leaving the overnight rate at 1.75%, while noting in their press release slowing global demand, sharply lower oil prices, negative business investment, along with slowing household credit and weaker regional property markets.  At the same time, consensus expectations for a hike […]

December 4, 2018 | Credit and Realty Prices in Contraction Together, Naturally

Economist Steve Keen writes yesterday in Australia’s Housing Bubble Pops, that the rate of change in mortgage credit (in red below) leads the level of house prices (blue), as shown here in America since 1990, with the 2006-09 collapse in both readily apparent.   While Australia and Canada boasted a record surge in home prices over […]

December 3, 2018 | Canadians Under-Saved and Unprepared for Slowing Economy

Some 90% of Canada’s economic growth since the last recession has come from household consumption and spending in the realty sector (see chart below), enabled by unsustainable growth in debt at every level of the economy. In the process, Canadians dramatically reduced their savings for rainy days and future needs like retirement and their children’s […]

November 30, 2018 | Class-Action Lawsuits for Climate Damage, Here to Stay

In 1965 then US President Lyndon Johnson’s Science Advisory Committee published a report titled “Restoring the Quality of Our Environment,” that warned carbon dioxide was being added to the earth’s atmosphere by the burning of coal, oil, and natural gas at such a rate that by the year 2000 the heat balance would be so modified […]

November 29, 2018 | Recession Due? Stocks are not ‘Defensive’

David Rosenberg can be helpful because he is one of the few economists who looks for negative trends in the data rather than just blue skies and sunshine.  His comments on the implications of a ‘Powell pause’ in this clip are lucid.  Here is a direct video link. This ‘elephant in the room’ could send stocks […]

November 28, 2018 | Housing Bubble Popping Again?

Home prices are precarious to a deflating debt cycle in the US, Canada, Austrailia, New Zealand, the UK, Hong Kong, Sweden, and…well pretty much everywhere that humans have used excessive debt to drive up realty prices far beyond income growth over the past decade.  See:  The U.S Housing Boom is Coming to an End, Starting in […]

November 27, 2018 | More on Why Product Sales Must be Separated from Financial Advising

Financial sales firms will never ‘get’ the sacrosanct importance of holding professional advisors to a fiduciary standard because masquerading sales as advising is such a lucrative business model for them. The crash of 1929, the decade of loss and suffering thereafter and the revelations of the Pecora Senate hearings of 1932-34, made this vividly clear […]

November 26, 2018 | Energy Innovation Powering Forward

Once humans commit to finding them, there are no problems only solutions. In the quest to go green, Scotland is way ahead of the rest of the UK, with nearly all electricity produced by wind power.  In October, 98% of Scotland’s electricity was produced by wind turbines, with the devolved government on track to produce […]

November 23, 2018 | Value versus No-Value Investing?

A dangerous feature of market cycles are the multi-year periods between bear markets when assets mostly go up, and buy-and-hold-at-every-price strategies look superior. But consider some numbers: In scenario one, say a person puts $1 million into stocks and corporate bonds, or funds of them, near the outset of a roaring bull market. Over the […]

November 22, 2018 | Canadian Recession Due, Who’s Ready For It?

When you have a decade of recklessly low interest rates along with lax-lending and borrowing, it should be no surprise that Canadian mortgage growth went pretty much parabolic since 2008 (as charted below).  It should also not surprise that Canada is now encumbered with some of the most over-valued, unaffordable real estate in the world, […]

November 21, 2018 | Nearing the Pause That Will Not Refresh?

Each business cycle, central banks optimistically hike rates with the stated goal of slowing the economy enough to prevent it from overheating and not so much as to trigger a recession.  They have failed in this goal 12 of the last 13 tightening cycles, with a recession and stock market swoon following all but one […]

November 19, 2018 | Delirious Assets Getting Much-Deserved Drubbing

As cryptocurrencies continue to tank, this cycle’s most deliriously valued ‘FAANG” stocks also took another big whack today, as shown here courtesy of CNBC. Not surprisingly, as shown below, these much-loved and widely owned names have, so far, fallen more than 20% from their recent 52-week highs.  If past mania cycles are prologue, these stocks might be […]

November 16, 2018 | Global Slowdown Hitting Vulnerable Canadian Economy

As Canadian crude fathoms a record low this week (chart below), we have news today that Canadian home sales fell further in October.   Heavily indebted and unprepared, the global downturn is coming at a particularly vulnerable time for Canada.  Even worse, what savings and pensions households do own have been funnelled into over-valued corporate securities and funds that […]

November 14, 2018 | US Slowdown Trajectory Continues

Missed the segment below last week, it reviews key points on the global downturn in motion. Sri-Kumar is a rare independent analyst that still appears on mainstream business media. As I have mentioned previously, out-performance of the US economy and stock market relative to the rest of the world is typically short-lived late cycle, before […]

November 13, 2018 | ‘Buy, Hold and Hope’ Never More Dangerous Than Today

As the US dollar Index (DXY) strengthens to a new 52-week high above 97, commodities are tanking along with global growth prospects into 2019, and North American government bonds are rising. Oil is down for a record 12th straight day with West Texas Crude (WTI) -24% in a little over a month.  Canadian oil–Western Canadian […]

November 8, 2018 | Ray Dalio on the Debt Ctisis and Navigating Net Worth Over Full Market Cycles

The goal is not to beat markets over a period of quarters or years, the goal is to establish and adhere to consistent principles that serve our best interests of financial stability and downside protection over full market cycles within our own lifetime.  A good discussion of many points in this segment. Ray Dalio is […]

November 7, 2018 | US Election Result Likely to Magnify Global Slowdown

For financial markets and the economy, the most relevant outcome of last night’s reweighting in the US Congress may be that further tax cuts and unfettered deficit spending are less likely over the next two years. While this should mean lower US debt accumulation going forward (a good thing), it also suggests less near-term fiscal […]

November 5, 2018 | Canada Beats America in the ‘Worst Housing Market’ Contest

Extremely high shelter prices exact a compound cost for years thereafter in the form of lost discretionary cash flow for other spending, debt servitude and lost savings for other needs. The US housing bubble that peaked last cycle in 2006 was epic and financially devastating for the masses, the highly levered financial system, the economy […]

October 31, 2018 | Anti-Trust Break-Ups Due for Monopolies–Much Needed

As the cost of capital rises and financial discipline moves back to the fore, consolidations and mammoth conglomerates that were enabled by ‘free money’ and lax regulation will naturally be unwound one way and another.  This creative destruction will help unleash competitive forces once more.  Jonathan Tepper explains in this segment as well as why […]

October 30, 2018 | Long Loans Mean Reduced Spending and Saving Ability for Years to Come

Indebted households have reduced spending and saving ability for the years it takes them to pay off debt. Today Canadians owe a record $1.71 of debt for every $1.00 of disposable income.  This suggests an extended period of lower consumption ahead, even if interest rates did not rise further from here. On top of massive […]

October 29, 2018 | The Capital Pain of Reaching for Marginally Higher Yields

Reaching for marginally more yield in corporate debt and equities, while taking on much higher capital risk, is dumb money management.  And yet, it continues to be the consensus financial recommendation. Today, because BAA-corporate bonds have been indiscriminately bought at high prices, their yield spread or net income benefit compared with much more liquid and […]

October 26, 2018 | Value is Coming, Who will Be Ready?

As markets plunge around the world this week, we should not lose big picture perspective on how relatively little they have mean reverted to date.  And also on how much further stocks are likely to fall before they complete their third, and potentially final, bear cycle of this secular bear that began in 2000. This […]

October 25, 2018 | Another Look at Cyclical Support Potential for the Canadian Stock Market

Another illuminating chart from my partner Cory Venable here offers a look at where cyclical support may lie for the Canadian stock market (TSX) in coming months.  The support band (in pink) manufactured by successive QE programs rolled out by central banks in 2010, 2011 and 2012, may prove an optical illusion as higher rates […]

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