Hilliard's Weekend Notebook - The U.S. Federal Reserve surprised markets this week with a small rate cut (expected), a forecast for fewer rate cuts next year and higher inflation (very unexpected). This was a more hawkish report than the market expected. The stock market reacted very negatively on Wednesday, with the S&P 500 losing 3 percent in just two […]

Hilliard's Weekend Notebook - Javier Milei is making huge changes in Argentina and U.S. leaders like Donald Trump and Elon Musk are planning to follow his radical moves. Will Argentina survive Milei? Will the U.S. copy his program?   Source: The Economist While Americans were electing Trump the far right and its billionaire backers were making plans to cut […]

Hilliard's Weekend Notebook - The U.S. stock market is extremely expensive, by all measures. Technology companies like Nvidia lead the way, but even the average stock is overvalued in relation to past cycles. When will there be a correction in the U.S. stock market? As we approach 2025 the markets continue to surge higher, perhaps not surprising as Wall […]

Hilliard's Weekend Notebook - President-elect Trump doubled down on his threat to impose tariffs on imports to the U.S.  This time he focused on two countries — Mexico and Canada — with a statement that he would put a 25 percent tariff on imports. How should Canada counter these threats? This week Trump posted: “On January 20th, as one […]

Hilliard's Weekend Notebook - President-elect Donald Trump believes in tariffs, and he plans to implement higher tariffs as soon as he takes office. Most economists think that is a really bad idea. Will Trump’s tariffs help or hurt the economy? Donald Trump has been a promoter of tariffs for a long time. He is on record in 1989 telling […]

Hilliard's Weekend Notebook - Elon Musk has been appointed by the incoming President of the U.S.  to head the Department of Government Efficiency, or DOGE, with a mandate to cut costs, reduce regulations, shrink the size of the bureaucracy and make government more efficient. In the announcement Trump called him the “Great Elon Musk”. Will the Great Elon Musk […]

Hilliard's Weekend Notebook - One of the hottest new technologies for production of heat and electricity is found deep underground. With ground-source heat pumps there is a year-round reservoir of constant temperature air just a few meters below the surface. This air is the same as the average temperature above ground. Heat pumps are useful for cooling in the […]

Hilliard's Weekend Notebook - Canadian policy makers are worried about potential weakness in the economy due to higher interest rates. One of the biggest challenges facing Canadians is the increase in monthly payments that comes with higher rates. Although there have been four Bank of Canada rate cuts this year, mortgage rates have not come down as much as […]

Hilliard's Weekend Notebook - The Bank of Canada made a jumbo rate cut, its fourth cut to the benchmark interest rate. The 50 basis points cut brought the policy rate to 3.75 percent. The justification for such a large cut is that CPI inflation has dropped below the target of 2 percent. The actual increase from a year ago […]

Hilliard's Weekend Notebook - The U.S. election on November 5 2024 is touted as a major event, as the policy and style differences between the two candidates are unusually large. Given how close the polls are — within the margin of error — there is a high degree of uncertainty and trepidation over this vote. Who will win? The […]

Hilliard's Weekend Notebook - Canadian physicist Geoffrey Hinton and three other scientists received Nobel Prizes this week for work related to advances in artificial intelligence. Their discoveries have the potential to revolutionize mankind’s ability to cure disease. But these advances in AI come with a warning from one of the recipients. Geoffrey Hinton, 76-year-old University of Toronto physicist and […]

Hilliard's Weekend Notebook - Canada is falling behind the U.S. in economic growth. Up until a few years ago, Canada and its huge neighbour to the south grew by about the same annual rate. But since 2022 Canada is falling behind by most measures. What happened? The Economist wrote an article on September 30, 2024 titled “Why is Canada’s economy falling […]

Hilliard's Weekend Notebook - China entered full panic mode, announcing stimulus measures to counteract the deflationary impact of weak property prices. But those policies may not be enough to lift the economy to the 5 percent growth target. This week China announced several measures to stimulate demand in a weak economy, a last-ditch effort to meet GDP growth goals […]

Hilliard's Weekend Notebook - On Wednesday September 18, 2024, the U.S. Federal Reserve cut 50 basis points off its benchmark rate, making the first move to lower rates in four years. History shows that economic cycles and stock market outcomes after the first cut are divided. Either this is the start of a deep recession and a stock market […]

Hilliard's Weekend Notebook - China continues to experience a significant collapse in its property sector, which is weighing heavily on Chinese families. Numerous attempts at stimulating the sector have failed. When will China’s property sector start to recover? There is a view suggesting that Beijing has lost control of the property market, which could be very damaging to the […]

Hilliard's Weekend Notebook - A weakening trend for the economy in the U.S. was confirmed on Friday. A recession is likely, although the official notification of recession will not come until 2025. The Federal Reserve will start to cut interest rates later in September after declaring victory in the battle against inflation. We seldom get definitive clues regarding the […]

Hilliard's Weekend Notebook - A massive glut of condominium apartments in Toronto threatens to sink the housing market. Condominiums were gobbled up by aggressive, highly levered speculators as a way of participating in the housing boom with minimal capital outlay. But now those apartments are hanging over a re-sale market with very few buyers. Investor-owners are losing money every […]

Hilliard's Weekend Notebook - The U.S. election is less than 80 days away. The race is a dead heat, but only one of them will win and the impact on markets and the economy may be very different depending on who wins control of the White House, the House of Representatives and the Senate. Will a Trump or Harris […]

Hilliard's Weekend Notebook - U.S. consumer inflation has returned to normal. This week’s 2.9 percent year-over-year gain for the CPI is not low in the historical context. Expectations for more good news on inflation are unrealistic outside of recession. And interest rates will not come down enough to satisfy both equity investors and highly indebted borrowers. In the chart […]

Hilliard's Weekend Notebook - U.S. stock markets crashed from Friday last week through Monday this week. High flying tech stocks cratered as well as the broad indexes like the S&P 500 and Japan’s Nikkei. Was this a crash of the large-cap technology sector, or does it signal the broader market is entering a bear phase? On Monday night some […]

Hilliard's Weekend Notebook - The Federal Reserve delayed cutting rates this week while ignoring signs of a pending recession. The U.S. economy is slowing rapidly and there is a multitude of clues that the U.S. will enter recession before the end of this year. The Federal Reserve has yet to cut rates, but that first cut is almost certainly […]

Hilliard's Weekend Notebook - Central bankers in Canada went out on a limb by cutting a key interest rate this week. The Bank of Canada cut its benchmark rate for the second time, by 0.25 percent to make a full ½ point reduction this year. The most powerful central bank, the U.S. Federal Reserve, has yet to make its […]

Hilliard's Weekend Notebook - Anticipation ahead of the U.S. Federal Reserve’s first rate cut is growing. Traders are betting on a first quarter-point cut at the meeting on September 17-18 as the most likely date, with more cuts to come later this year in November and December. But traders are wrong in thinking that rate cuts are good for […]

Hilliard's Weekend Notebook - Canada remains far behind many other developed countries in the OECD when comparing expenditures on research and development as a portion of GDP. This lack of investment will continue to hurt Canadian economic growth and productivity for years to come unless changes are made. Can Canada boost its research and development spending? Total research and […]

Hilliard's Weekend Notebook - On July 5, 2024, the unemployment rate in the U.S. was announced at 4.1 percent. This report appears to have triggered an extremely reliable recession indicator.   The Sahm Rule, named after former Federal Reserve economist Claudia Sahm, says that if the unemployment rate rises by 0.50 percent from the bottom a recession has already […]