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September 27, 2022 | Housing Bubble Deflating

This video presents the US housing dynamics well. Unfortunately, after many similar factors, the Canadian housing excesses are even greater and the downside bigger. Home prices have greatly outpaced average persons disposable income. In the video we will explain what this means for the U.S. Housing market and how home prices corrected during similar housing […]

September 26, 2022 | Private Equity Losses Not Yet Booked

Public pensions have reported a median -7.9% for the fiscal year ended June 30–their biggest loss since 2009 (data published in The Wall Street Journal). This figure reflected the returns for traditional publicly traded investments like stocks and bonds to the end of the second quarter. However, illiquid assets, including private equity funds (PE), represented nearly a […]

September 23, 2022 | ‘Snow-Washing’ in Canada, Money Laundering All Star

I have long thought that a housing bust and ugly recession might finally catalyze a serious crackdown on money laundering in Canada. Apathy has been the status quo while asset prices were rising. Now, as prices plunge and pain spreads, public tolerance should shift. Realty reports show that many properties bought in early 2022 are […]

September 22, 2022 | Operation ‘Break Things’ To Continue

  Hiking the US Fed funds rate a further .75 yesterday, now 3 to 3.25% (from 0 to .25% in March), Chair Powell acknowledged that unemployment will rise, adding: “Nonetheless, we’re committed to getting inflation back down to 2%.” Powell reiterated that his board plans to raise US base rates a further 1.25% (4.25 to 4.5%) by […]

September 19, 2022 | 2022: Three Quarters of Pain and Counting

As we start the third week of September, with the US Fed’s much-telegraphed rate hike on Wednesday (+.75 with some 30% betting odds of a full percent!), markets are peaked. Bitcoin (-71%) continues to lead the crypto Ponzi down the back side of heartbreak hill. So far, the S&P 500 -20%, the Nasdaq -29%, and […]

September 16, 2022 | $95 Billion in Monthly Liquidity Reduction to Begin Today

Starting today, the US Fed has pledged to run off its balance sheet (reduce liquidity in the banking system via ‘Quantitative Tapering’) by $95 billion a month–double the amount they were supposed to have been withdrawing (QT) since the start of June and about 5.5x the $17 billion per month they actually have withdrawn. We will […]

September 15, 2022 | Consumer Dreams Evolving

There’s an old saying: the best days of owning a boat are the day you get it, and the day you sell it. The sentiment is especially true when people borrow to buy recreational items. While usage of the lifestyle item is periodic, related expenses tend to be continuous. Recreational properties and equipment saw a […]

September 14, 2022 | Lower Prices Improve Affordability and Investment Prospects

Well before the rate increases this year, many would-be investment properties had rents insufficient to cover expenses, and owners were subsidizing the negative carry in hopes that capital gains would more than repay their costs over time. This helpful calculator allows us to compare relative numbers. In February 2022, with the average Canadian national sale price of […]

September 13, 2022 | EPB Macro: The Compounding Cost of Short-Term Thinking

This video offers an excellent overview of the compounding cost of short-termism and entitlement thinking in a world of corporations and households who expect endless government support and lower taxes. The U.S. Government is facing some serious fiscal and monetary issues that don’t seem to have a positive outcome. In this video we will see […]

September 12, 2022 | World’s Hottest Housing Markets Face Painful Reset

The rapid cooldown in real estate threatens to worsen a global economic downturn and is emerging as a key variable for central bankers who want to tamp down inflation. Here is a direct video link. Also, see The World’s Hottest Housing Markets Face a Painful Reset In Australia and Canada — two of the world’s bubbliest markets […]

September 10, 2022 | Synchronous Global Housing Downturn

This segment offers a good overview of the global housing downturn. Rather than thinking of it as a housing “crash” though, realists can see it as an inevitable mean reversion cycle following a massive speculative bubble. Home Prices across America are DROPPING FAST, according to New Data from Redfin. Metros like Austin, Dallas, San Jose, […]

September 9, 2022 | Mortgage Stress is International Saga

Recent Canadian mortgage data compiled by the Bank of Montreal gives a glimpse at the rate of change afoot for many Canadian property owners: Some 20% of all Canadian mortgages outstanding ($260 billion) are variable rate loans taken out near the interest lows at 1.5% into February 2022. With rates on offer now closer to 5%, many […]

September 8, 2022 | Desjardins: Canada the Most Debt Sensitive Economy in the World

Canada comes into this global downturn with a world-leading real estate bubble (property values accounting for some two-thirds of household net worth) and record-private debt levels at a whopping $7 trillion (households and businesses) in an economy tracking about $2.6 trillion in GDP. A bursting debt bubble in a poorly diversified economy largely dependent on […]

September 7, 2022 | Debunking the Volcker Myth

The USD Index (DXY shown below since 1980) above 110 this morning is a 20-year high not seen since April 2002. The Euro (58% of the dollar index) is below par and at the lowest since July 2002, while the Japanese Yen (14%) is at the lowest since 1998, and the British Pound (12%) is […]

September 6, 2022 | Quantitative Tightening is Supposed to Step up 5.5x This Month

Happy September!! Starting now, the US Fed is to run off its balance sheet (reduce liquidity in the banking system via ‘Quantitative Tapering’) by $95 billion a month–double the amount they were supposed to have been withdrawing (QT) since the start of June. In reality, though, rather than shrink its holdings by $45 billion a […]

August 31, 2022 | Chinese Property Strife is Contagious

Falling property prices and a growing cash crunch are upping financial pressures globally. Chinese real estate development and its capital flow to other countries like Canada helped inflate demand and prices from 2009 to 2021. Reverse effects are being felt worldwide too. See more on the implications for developers, lenders and investors in WSJ: China’s property […]

August 30, 2022 | EPB Macro Compares 2022 and 2008 Housing Market Risks

This video presentation offers an illuminating comparison of US housing market risks today versus the last bust in 2008. Many economists are talking about a potential 2022 housing crash, but very few are comparing this housing market to the 2008 crisis. In the video we will look leading indicators, debt levels, and monetary policy from […]

August 26, 2022 | Rosenberg: Rate Hikes Likely to End Sooner Than Markets Think

David Rosenberg, founder of independent research firm Rosenberg Research & Associates Inc., talks with Financial Post’s Larysa Harapyn about how rate hikes will end sooner than markets think. Here is a direct video link.

August 25, 2022 | Housing Has Led The Deepest Economic Contractions Historically

Some 65%+ of households in Canada and the US own real estate. While the most affluent 10% own 89% of the stock market (in some form), the bottom 90% own 55% of all real estate. Being the lion’s share of household net worth, what happens in the housing sector is the most significant driver of […]

August 23, 2022 | Epic Auto Bust Cycle Now Unfolding

After housing, the auto sector is the next major driver of the consumer-driven economy. Since most buyers in both sectors are heavily financed, demand and prices tend to expand and contract with the credit cycle. From 2020 through 2021, a confluence of ‘easy money’ factors enabled demand to overwhelm supply and drive up auto prices. […]

August 21, 2022 | Danielle on CBC Weekend Business Panel

Danielle was a guest on the CBC Weekend Business Panel, discussing inflation, consumer stress readings, Kmart pop-ups in the Bay and the move toward hybrid work models. Here is a direct video link.

August 18, 2022 | Rapid Rate Change Just Starting To Be Felt

A key point regularly missed is that monetary policy moves at a multi-quarter lag through the economy. That means that the rapid rate hikes year to date have just started to be felt and will continue to slow spending and growth through 2023. This will be the case even if central banks stop hiking and […]

August 17, 2022 | Recessions: Best Prepared For Than Ignored

Recessions are a regular resetting part of economic cycles measured as a multi-quarter decline in five key indicators: real gross domestic product (GDP), income, employment, manufacturing, and retail sales. While recessions always bring down commodity prices and inflation, they are dreaded because they also reduce revenues, profits, employment, asset prices, and the ability to service […]

August 16, 2022 | Wild Abandon Bounces Back

As risk markets have rebounded over the past month, FOMO has resumed with retail flows moving back to the sketchiest and over-valued securities and shorts being forced to buy back positions. The basket of most-shorted stocks tracked by Goldman Sachs is up almost 39% this quarter. As shown below (from Goldman Sachs Prime), the past month has […]

August 15, 2022 | Commodities Slump with Global Growth Outlook

Overnight, China’s National Bureau of Statistics reported that retail sales grew by 2.7% in July-nearly half as much as the consensus forecast of 5%. Industrial production also missed the 4.6% estimate with an increase of 3.8% as the Chinese economy joined the US in shrinking during the second quarter. China’s GDP grew by just 2.5% in the […]

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