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February 12, 2024 | China Exporting Deflation To The World
Since China entered the World Trade Organization in December 2001, US producer prices (black line below since 2000) have tracked up and down with China’s Consumer Price Index (CPI in green). Awash in excess capacity today, China is exporting deflationary pressures to the rest of the world. In several key manufacturing sectors, goods are […]
February 10, 2024 | Sri-Kumar: Commercial Real Estate ‘Tsunami’ Coming
Komal Sri-Kumar, president of Sri-Kumar Global Strategies, joins ‘Squawk Box’ to discuss the latest market trends, the looming commercial real estate crisis, impact on the Fed’s rate path outlook, and more. Here is a direct video link.
February 9, 2024 | Less Insurance Coverage Suggests Less Exposure Appetite
Property insurance premiums are leaping, and coverage is becoming harder to find in many areas of the world. Few note the significance of these trends and the negative impact on asset prices. Less insurance coverage naturally reduces the amount of net worth owners want in real estate overall and in any location. Many homeowners in […]
February 8, 2024 | Canadian Consumer Insolvencies +23% in 2023
Canadian consumer insolvencies rose significantly in 2023, up 26.2% in Ontario and 23.0% across Canada. The latest Hoyes Michalos 2023 Joe Debtor insolvency data is available here. Doug Hoyes explains the findings below. What’s distressing to me is the person filing for insolvency is someone with higher income than in the past, says Doug Hoyes, co-founder […]
February 7, 2024 | Powell Focused on Killing the Fed Put?
Danielle DiMartino Booth believes Fed Chair Powell is sticking to prudent interest rate levels in an effort to crush the Fed put and do the “right thing” in the long term for the economy. Here’s hoping… Powell: We Wouldn’t Wait to Get to 2% Inflation to Cut Rates — DiMartino Booth with Charles Payne of […]
February 6, 2024 | China Stumbles Under Debt and Real Estate Bust
Our September 2021 client letter “Shifting Foundations” examined the default of China’s second-largest property developer, Evergrande, and the implications of a real estate bust leading to a slump in the Chinese and global economy. You can read the entire letter at this link. Here’s a taste: Insolvency problems in China’s real estate sector sent shock […]
February 4, 2024 | Danielle presents at VRIC 2024: Capital Prospects in 2024
Danielle presents at VRIC 2024. Here is a direct video link. Further to real interest rates (nominal rates minus inflation) being demand-crushingly high for borrowers (but attractive for savers), the chart below shows the US Fed Funds Rate (FFR) minus the 5-year inflation swap rate is the highest today in over 20 years.
February 2, 2024 | Thoughts From The Front Line of Commercial Real Estate
As Meta and Amazon further fan animal spirits in the tech sector, the melt in commercial real estate is spreading through the economy and financial system. US regional banks are -54% since January 2022, and the contagion is international, see Commercial Property Losses Hammer Banks on Three Continents: Investors have wondered when the pain from the […]
February 1, 2024 | Lacy Hunt on Thoughtful Money
Is the soft landing camp being proven right? Have we been able to side step the Lag Effects so many expected from the Fed’s aggressive campaigns of rates hikes and Quantitative Tightening? Is inflation indeed on its way to being tamed this year? For answers, we have the great fortune to sit down today with […]
January 31, 2024 | Layoffs Leaping in 2024
Companies could be expected to ramp up layoffs come March, according to research by Danielle DiMartino Booth, CEO of QI Research. Here is a direct video link.
January 30, 2024 | Re-Steepening of the Yield Curve Signals Rising Unemployment and Deepening Bear Markets
The US 10-2-year Treasury yield spread (via YCharts below) has moved from a deep inversion at 108 bps last July to -14 bps today. This process is known as re-steepening.Re-steepening of the yield curve (10 minus 3-year spread in brown below since 1989, courtesy of my partner Cory Venable) has historically coincided with rising unemployment claims (in […]
January 29, 2024 | Danielle on Thoughtful Money
Danielle was a guest with Adam Taggart on Thoughtful Money. Here is a direct video link.
January 25, 2024 | Hoisington Q4 2023 Review and Outlook
Hoisington Management’s latest Q4 quarterly review and outlook is now available here. With some risk markets still drunk on blind optimism, the list of recessionary indicators grows longer by the day. Real-world facts always matter in the end. Hoisington summarizes some of the most historically prescient data to date: Over the past year, inflation, real GDI, […]
January 24, 2024 | Real Rates Rise After Central Banks Stop Hiking
Well-documented policy lags suggest that central banks have done more than enough to reverse the inflationary impulse over the next 12 to 24 months. As the rate of inflation comes down, real interest rates (overnight rate less CPI) rise (better for savers but worse for borrowers) and crimp the economy even after central banks pause […]
January 23, 2024 | China Canary Warns About Global Economy and The Downside To Euphoria
Remember in 2007-08 when bulls were all in love with China and projecting endless growth and outsized investment returns as far as the eye can see? It turns out the business cycle was not repealed, and high valuations and euphoric consensus remain a reliable precursor to mean reversion and capital losses. Chinese stock prices have […]
January 22, 2024 | Clamp Down on Short-Term Rentals
Limiting short-term rental properties increases housing inventory for primary occupancy, pressuring long-term rents and sale prices lower. This is a necessary part of helping to abate the housing affordability crisis. But it comes at the expense of highly leveraged owners and lenders who were banking on prices only going up. B.C.’s new laws on short-term […]
January 21, 2024 | DoubleLine Markets Outlook 2024
The first 57 minutes of this presentation are a worthwhile macro overview. (The final 17 minutes are a micro dive into individual debt types for US investors and less accessible for Canadians and lay people). In his annual “Just Markets” webcast presented Jan. 9, 2024, DoubleLine CEO Jeffrey Gundlach among other outlooks shares his forecast […]
January 20, 2024 | Employment Cycling Down
Unemployment spikes as recessions begin, but before that, early warning signs are fewer job openings and a shorter work week. The latest December jobs report showed spreading cyclical weakness. Year over year, Indeed job postings fell 15% in 2023. See Finding a New Job is Getting Harder.Under the hood, postings for lower-paying positions increased while higher-paying […]
January 19, 2024 | Yield Curve Signals Recession in 2024
The US 10-year Treasury yield has been below the 3-month yield since November 2022 (14 months and counting). This rare yield ‘inversion’ has preceded each recession (grey bars) since 1982, with no false signals. As usual, equity bulls perpetually bet this time will be different. In past cycles, the US Fed stopped hiking when […]
January 18, 2024 | Canadian Home Prices and Rents Amid Much Needed Mean-Reversion
Canadian home prices are retreating. In previously hot areas, properties are selling up to 20% below 2022 prices, but nationally, the average sale price was just -11.4% in the latest quarter. After an outrageous 59% average price increase nationally between Q1 2020 and Q1 2022, the mean-reversion prospects remain big from here. As shown below, courtesy […]
January 17, 2024 | Outlook Weakening Under Equity Market Optimsim
January US Empire Manufacturing reading this morning was -43.7, much worse than the -5 estimated and much weaker than during the 2008 financial crisis/great recession. Meanwhile, the analyst consensus is for S&P earnings per share growth of more than 10 percent over the next 12 months (red line below since 2000, courtesy of Mikael Sarwe) even […]
January 16, 2024 | Rate Cuts Come as Demand-Driven Economy Slows
The Bank of Canada’s (BOC’s) Business Outlook Survey for the fourth quarter of 2023 found that 40% of Canadian companies were experiencing a slowdown in sales. Indicators of future sales – including order books, advance bookings, and sales inquiries – remain subdued. See: Bank of Canada surveys show weak business environment, lower inflation expectations. The dour outlook […]
January 12, 2024 | Rate Cuts Come in Response To Intensifying Financial Strife
With inflation cooling and unemployment rising, rate cuts are coming into view. Permanent job losses have already accelerated in line with the onset of the past three recessions since 1995 (see arrows and grey bars below, courtesy of Game of Trades). Since 1969, the longest Fed pause time between the last rate hike and […]
January 11, 2024 | Prices Fall and Home Listings Rise as Canadians Struggle with Overhead
When Canadians sell a property for less than is owed in the mortgage, lenders are entitled to pursue any balance remaining plus interest, fees, and legal costs; this includes garnishing bank accounts and income. For those in debt strife, it’s wise to speak with an Insolvency Trustee to consider if you may be a candidate […]
January 10, 2024 | Financial Predation is Major Throughline
There are so many incredible developments in financial markets right now it isn’t easy to choose what to write about. And there are so many complex interconnections. Suffice it to say the throughlines are rampant financial fraud and unusually high capital risk, with very few people positioned to prosper in 2024. Just one area of […]