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February 3, 2023 | EPB Macro: Housing Leading The Economy Lower

This segment reviews US data, but the trends are similar in Canada. The EPB Housing Deep Dive report is focused on the residential construction cycle (the leading sector of the economy). Here is a direct video link. This report is a preview of content exclusive to members of the EPB Research Gold Tier. If you would […]

February 1, 2023 | Bullish Dreams Should Be Tempered By History

January brought gains across most asset classes, especially for the junkiest debt, equities and crypto-Ponzis. The bulls are chomping at the bit to convince us that the 2022 loss cycle is now over. However, it bears noting that big rebounds have been a regularly recurring feature within bear markets since time began. The Bloomberg chart […]

January 31, 2023 | Irrationally Exuberant January Comes to a Close

The US Fed’s next rate announcement is due on Wednesday, and the consensus expects a 25 basis points (bps) increase, raising base rates in the banking system to 4.25 to 4.75% from 0 to .25% one year ago. Lest anyone forget, the Fed is also reducing assets on its balance sheet (QT) by $95 billion […]

January 26, 2023 | Tightening Will Continue To Bite Through 2023/2024

As we’ve noted many times, changes in monetary policy—tightening or loosening—move through the economy at a lag of one to two years. For this reason, the record tightening done by central banks in 2022/2023 will slow the economy into 2024, and any easing efforts in late 2023/24 will not fully be felt until 2024/2025. In […]

January 25, 2023 | Timeless Advice: Don’t Buy Stuff We Don’t Have The Cash For

This clip is ten years old and timeless. Funny because so painfully apropos at every income level. (Thanks, John, for sending this one from the archives). On the other side, of course, we have all the credit pushers brainwashing the masses with assurances that we “deserve credit” and are “richer than we think.” Make it stop! Here’s a direct video […]

January 24, 2023 | ECRI: A Recession Really is Coming

Lakshman Achuthan and Anirvan Banerji are co-founders of the Economic Cycle Research Institute (ECRI), which determines recession dates for 22 economies around the world. Their latest findings are summarized in Don’t be fololed! A recession really is coming: Recession concerns in the US are widespread these days. Yet, some economists argue that the strength of the labor market […]

January 23, 2023 | Hoisington Q4 2022 Review and Outlook

Hoisington Management’s fourth quarter 2022 Review and Outlook is now available to the public on its website here. As always, a concise master class on monetary impacts and the economic cycle, see A Theory of Interest Rate Cycles. The bottom line: growth bearish and investment grade bond bullish: Poor consumer spending over the critical Christmas shopping period, slumping exports, […]

January 19, 2023 | Equities Don’t Bottom When Yield Curves are Inverted

The percentage of global 2/10-year Treasury yield curves inverted at the end of 2021 (long rates lower than short) was 90% (in blue below since 1980, courtesy of Lance Roberts). Historically, recessions (grey bars) and bear markets (S&P 500 in black) have followed when the number of inverted 10-year curves reached 50% (red dotted line). […]

January 18, 2023 | Epic Financial Busts Bring Epic Opportunity

A decade of ultra-low rates punished risk-conscious savers and encouraged profligate financial decisions among the masses. Rather than use record-low interest rates to get out of debt faster, most levered up to imprudent levels. Insufficient cash and falling prices are common themes as pandemic excesses unwind. This will take some time, but for the few […]

January 16, 2023 | Tesla: Zero To Most Profitable in 15 Years

Truly other world… Sandy Munro was blown away by Tesla’s profit margin, which is eight times more than Toyota’s.  Here is a direct video link.

January 13, 2023 | Canada’s Housing Downturn Barely Started

Bank economist Robert Kavcic offers useful macro housing context in the Better Dwelling segment below. One caveat worth noting, though: from a price peak in February 2022, a housing bottom by mid-2023 would be an unusually quick downcycle. Meanwhile, the Bank of Canada’s late but great tightening from March 2022 through early 2023 will contract […]

January 12, 2023 | Monetary Policy Changes are Felt Slowly and Then All At Once

Used car prices fell nearly 15% year over year in December, and as shown below, since 1997, prices would need to fall another 30% to return to pre-COVID norms. Monetary policy changes move through the economy in 12 to 24-month lags. This happens for a few reasons. First, many interest rates are fixed for set […]

January 11, 2023 | This Housing Bust is Global

Canada led the world in the most egregiously inflated home prices in the past few years, but New Zealand, Australia and Sweden were other top-risk contenders. Now high debt levels are having similar demand and price-depressing impacts in many countries all at once. See Sweden is facing its ‘day of reckoning’ as house prices plummet: “We […]

January 10, 2023 | Real Estate Prices Typically Contract for Years After Bubbles Burst

In the first quarter of 2021, residential ‘investment’ in Canada (real estate commissions, construction of homes, significant renovations, and ownership transfer costs) comprised some 9% of Canada’s GDP, while business investment plunged. US residential investment peaked at 6.7% in 2006 before that epic bubble burst. We have noted repeatedly that Canada’s exuberance in real estate was an unsustainable […]

January 4, 2023 | 2023 Comes in Like Ongoing Bear for Stocks and Commodities

Two thousand twenty-two vaporized $25 trillion of notional equity value from global balance sheets, and the global bond market lost nearly $10 trillion more. Together, the decline in these two asset classes amounted to about a third of the world’s 2022 103.86 trillion GDP, not counting ongoing losses in real estate, commodities, or the crypto […]

December 30, 2022 | Cheers To Healthful Longevity

Seventy-two percent of Americans (Canadians, about the same) are now overweight and obese, reducing the quality and quantity of their life. Not to mention crushing the sustainability of our sick-care system. Study after study shows that it’s the type and quantity of things we are consuming. Here’s to delicious things that don’t promote cancer, heart […]

December 28, 2022 | Home Prices Are Falling For Good Reasons

I recently reviewed Canadian real estate metrics in Canadian home prices need to fall. The segment below reviews similar affordability deficits in US home prices. The median US household income is $54,000, while the household income needed to qualify to buy the median US single-family home is $87,000 (up nearly 50% year over year). Real estate presently […]

December 20, 2022 | Fun with Stocks and Curves

The S&P 500 is down just over 20% since January 4th and a seasonally unusual -6.4% month to date. Under the hood, the most widely held stocks are leading the descent. The top five most expensive S&P 500 companies are now: Apple (6.23% of index) -27% Microsoft (5.65% of index) -28% Amazon ( 2.42% of the index) […]

December 19, 2022 | Canadian Home Prices Need To Fall

According to Statscan, 89% of Canadian individuals earn less than $100,000 annually. The median household income is $75,000 nationally (see more here) and just over $80,000 per year in the Greater Toronto (GTA) and Vancouver (GVA) areas. According to CMHC (calculator here), a household with $100,000 in annual income ($8,333 a month before tax) and no other debt can qualify […]

December 16, 2022 | Bill White on Cascading Risks in a Highly Levered System

Bill White is a rare former central banker with decades of experience and a truth chip. Always refreshing to hear. Canada comes up in this discussion specifically. Here is a direct video link. Former central bank insider William White one-on-one with Quill Intelligence CEO & Chief Strategist Danielle DiMartino Booth. There’s no more consequential time to […]

December 14, 2022 | Cooler CPI and The Crowd Goes Wild

Fourteen years of ever-easier money has reared a generation of mindless financial allocators and gambling preoccupations. Whatever this is, it’s not investing, and the costs of waste and mal-investment will be with us for years to come. Patience and self-discipline remain the best antidotes to destructive madness and mania. Danielle raises an interesting point in […]

December 13, 2022 | Lower Inflation is Good, but Not Bullish For Risk Markets

November US CPI at 7.1% year over year was .2% lower than the 7.3% consensus forecast. Excluding food and energy, the consumer price index rose 0.2% in November (compared with .3% expected and was the smallest advance in 15 months), up 6% from a year earlier. Every sector showed a smaller increase in November than […]

December 12, 2022 | Inflationary Pressures Moving Lower with Demand and Prices

Demand destruction is weighing on prices globally as financial conditions tighten. It’s not just interest rate increases three times faster than historical norms, an estimated $750 billion is running off of global central bank balance sheets monthly as the massive 2020-22 QE injections now reverse. Notwithstanding new sanctions on Russian oil and continued production cuts […]

December 8, 2022 | Rosenberg: 2023 outlook

David Rosenberg, founder and president of Rosenberg Research, joins BNN Bloomberg to discuss his outlook for the Canadian economy amid rising rates. Rosenberg says the Canadian economy will receive the payback from the BoC’s tightening cycle, and he expects a recession to occur next year. Furthermore,Rosenberg adds the BoC could be forced to cut rates […]

December 7, 2022 | Bank of Canada Will Pause as Financial Conditions Tighten in 2023

The Bank of Canada raised policy rates another 50bps today, taking base rates in the banking system to 4.25% from .25% at the start of the year. As we look into 2023, it bears remembering that monetary changes move through the economy with lags of up to two years. The Bank of Canada explains on their […]

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