ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION
June 19, 2023 | Scarce and Expensive Funding Brings Financial Sobriety
There’s a timeless adage that when money is cheap and easy, many people do dumb things with it. When money was free and easy (2010 through 2022), dumb things were all the rage. In 2021, $346 billion was handed out to startups by US venture capital firms alone, averaging more than $86 billion a […]
June 15, 2023 | “Skip”, QT and High For Longer–Not Bullish
A world of bullish commentators asserts that Fed pauses are positive, even though the worst economic and stock market downturns have always come after the Federal Reserve stops tightening. After ten consecutive rate increases and the sharpest rate of change since 1980–yesterday, Fed Chair Powell announced a “skip” with ongoing quantitative tightening (QT) and possibly […]
June 14, 2023 | Lagging Shelter Costs Mask Magnitude of Disinflation Unfolding
Shelter costs account for a whopping one-third of the US consumer price index (CPI). Ex-shelter, the other two-thirds of CPI components deflated 0.1% month over month in May and were a tame +2.1% year-over-year (close to the official 2% CPI target). Higher home and rent prices were significant factors in spiking inflation between 2020 and […]
June 13, 2023 | Disinflation Offers Cause For Pause
May’s US CPI at 4%–the lowest since March 2021–has increased the prospects of a Fed pause tomorrow; a July hike remains possible. But as I’ve pointed out for months, pauses are not bullish; historically, they’ve preceded the steepest part of economic and market downturns. The good news for consumers (but not corporate profits) is that recessions […]
June 12, 2023 | Full Cycle Bearings
The S&P 500 is up 11% YTD (below in brown); the Nasdaq nearly 33%; and the TSX is +2.5%. Under the hood, a 53% year-to-date average gain for the seven most expensive US tech companies has done the lifting (in green below since December 2022), while the other 493 S&P 500 companies (in orange) have […]
June 10, 2023 | Technology Enabling Brighter Future
With Canada battling horrible forest fires, there is good news: we have solutions to stop compounding the harm. Along with sending well wishes and support to those directly impacted, individuals are each called to evolve and help lead the change. Keeping ourselves apprised of rapidly advancing technology is a first step. The clips below help. […]
June 9, 2023 | Recession Is The Policy Goal and It Will Be Achieved
A deflationary recession is the goal of central bank policies today. They’re determined to get there, and they will succeed. Make no mistake. Eric’s update is worthwhile. Eyes on the prize. (You can fast-forward through the channel’s crypto commercials). On today’s episode of On The Margin, Eric Basmajian Founder of EPB Research joins the show […]
June 8, 2023 | Bank of Canada Strikes Again
Yesterday, concerned about lagging inflation readings and renewed froth in Canadian housing markets, the Bank of Canada came off its pause since January and announced yet another 25 bps hike. Now at 4.75%, the dramatic 450bps of rate increases since March 2022 are shown below from the BOC website, all in addition to quantitative tightening (liquidity withdrawal […]
June 7, 2023 | Recession Start Date and Stock Markets
Recession Guessing Game — DiMartino Booth and Charles Payne of FBN Answer Questions. Here is a direct video link. The five most expensive tech companies now comprise 25.7% of the S&P 500 (a record since the infamous Nifty Fifty stocks in 1972). Rebounding 33% year-to-date, the tech-centric Nasdaq 100 (30.51% weighted in information technology companies and […]
June 6, 2023 | Against the Rules: Crypto Skeptic Proven Right
Always a relief to hear an admission that Emperors are naked… If you spend any time reporting on the world of crypto currency and Bitcoin, then you’re going to run across the name Molly White. She’s a software engineer who has been called “the cryptocurrency world’s biggest critic.” Michael Lewis gets her on the line […]
June 5, 2023 | ECRI: Market “O-Shit” Moment Yet To Come
BLS estimates (notoriously revised after the fact) boosted the May US job report more than anticipated last week. Under the hood, the actual average work week contracted to 34.3 hours and is back to January 2020 levels. If this contraction is factored into the numbers, Friday’s payroll number was negative 140,000 jobs, not the […]
June 3, 2023 | Danielle on Living Your Greatness Podcast
Host Ben Mumme is a truly impressive millennial. A former provincial and national water polo athlete, Ben is a college professor, coach, graduate student, and the host and producer of the Living Your Greatness podcast. Ben also authors the weekly Living Your Greatness newsletter focused on wisdom, timeless insights, and inspiring stories of world-class living legends. Go, Ben! […]
June 2, 2023 | Mind The Pause
Last night a debt-ceiling bill passed in the US House of Representatives and is expected to clear the Senate within the next day or two. Unsurprising, they have passed over 100 of these increases in the last 80 years. More significant is the contractionary impact on the money supply. Over the past five months, the […]
June 1, 2023 | Negative-Carry Rentals Typical in the GTA
In 2020, Greater Toronto Area condo investors who bought a unit with a mortgage cleared $63 a month in net rent, on average (before any needed repairs). In 2022, they lost $223. Fourteen percent of condo owners lost $1,000 or more monthly (CIBC report). Parsing the numbers further, in 2022, more than 80% of resale […]
May 31, 2023 | AI Excitement Distracting Some from Ongoing Bear Market
David Rosenberg, Rosenberg Research founder and president, joins ‘Fast Money’ to discuss why he thinks the A.I. boom is distracting investors from recession risks. Here is a direct video link.
May 30, 2023 | Retail Bellwethers Warn on Recessionary Trends
Last week, Costco joined the long line of retail bellwethers sounding the alarm on recessionary trends in consumer spending. It’s everywhere. It’s everywhere. See What Costco’s baskets reveal about consumer finances, to wit: The latest evidence came from Costco whose average customer tends to be higher income. The retailer on Thursday said comparable sales excluding fuel in constant […]
May 29, 2023 | Lessons to be Learned in Property Pain
The latest CMHC report notes that Canadian household debt totalled 107% of the country’s economic output at the end of 2021–the highest of any G7 country–and up from 95% in 2010 and 80% in 2007. Household debt has risen since 2021 and amounted to 180% of disposable income at the end of 2022. Mortgages account for some […]
May 28, 2023 | Danielle on CBC Weekend Business Panel
Danielle appeared on CBC’s Weekend Business Panel talking about the CMHC report on Canadian household debt levels, AI mania and the US debt ceiling. Here is a direct video link.
May 27, 2023 | Lacy Hunt Update on Financial and Business Cycle
For those that want to skip to the bottom line, a discussion of the latest money flow data begins at the 29-minute mark on the play bar. Dr. Lacy Hunt and I discuss how excessive debt never ends well. Additionally, we explore the history and current structure of debt and interest rates relative to the […]
May 26, 2023 | Tech Mania Magnifies Downside From Here
In the latest AI-driven chapter of mania, chipmaker Nvidia has leapt 186% year to date and is trading about 15% above its November 2021 top. At less than $50 billion in expected 2023 revenue and a current market cap of $1 trillion, the stock is trading about 44x expected sales. Pure madness. There’s no math […]
May 25, 2023 | Deflationary Forces on Deck
Will Debt Debate Finish the Fed’s Inflation Battle? — DiMartino Booth joins Charles Payne of Fox Business News to discuss. Here is a direct video link. As shown below, inflationary pressures have come off hard year over year (Trueflation data here). As monetary and fiscal forces contract, recession, rising unemployment, excess supply, and overcapacity are formidable […]
May 24, 2023 | Now Playing: 6th Major Housing Downturn Since 1960s
The median new US home in April sold for $420,800 -15% lower than the peak last October. Less spending is evident in home improvement spending too. Yesterday, Lowe’s joined Home Depot in announcing a year-over-year decline in same-store sales (the first since 2009) with a marked fall-off in big-ticket purchases. Higher interest rates and falling […]
May 23, 2023 | Largest Property Owners Strategically Defaulting on Mortgages
Some property owners are defaulting on mortgages because they lack the cash flow to make payments; others are defaulting to cut investment losses and hand properties over to lenders. See, Top property owners are credit-worthy–they might default anyway: “The thinking was that the institutions would be the last to give the keys back, but it may […]
May 20, 2023 | Chinese Property Market in Turmoil Too
The segment below offers interesting insight into the Chinese real estate cycle as the easy credit era ends. Similar trends are happening around the world, all at the same time. The May Day Golden Week used to be one of the peak seasons for real estate sales in China. However, this year’s May Day holiday […]
May 19, 2023 | Price Discovery Coming For Realty Sector
Historically it has been typical at the beginning of real-estate downturns for listings to decline as owners try and extend loans rather than sell properties at lower prices. That has happened over the past year with residential and commercial properties. At first, this suppresses inventory for sale and reduces price discovery, stalling the clearing process. […]