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 […]

Hilliard's Weekend Notebook - The resilience of Canadians and the Canadian financial system is very important to Canadians. The Bank of Canada monitors this, and reports that the financial system is sound. But there are a large number of mortgage renewals and payment adjustments about to hit over the next few years. In a recent speech Tiff Macklem, BOC […]

Hilliard's Weekend Notebook - Growing China-based production of solar panels and other key components ensures that a massive supply glut will arrive in 2024. Prices for solar panels are plummeting in most world markets, but the U.S. consumer will pay substantially higher prices. According to Bloomberg BNEF, China-based manufacturers continue to build new capacity beyond the level of expected […]

Hilliard's Weekend Notebook - Real residential house prices in Canada have grown by more than four-fold since 1970. This means that house prices have grown much faster than inflation, and housing unaffordability is extreme compared to the past and other countries like the U.S. Can the housing market in Canada be fixed? This chart shows prices indexed to 100 […]

Hilliard's Weekend Notebook - The Bank of Canada cut interest rates by 25 bps on Wednesday and the ECB made a similar cut on Thursday. This marks a significant moment in the history of interest rate policy changes and could be a turning point. CPI Inflation has moderated enough (2.7 percent) to allow cuts without a loss of credibility. […]

Hilliard's Weekend Notebook - Germany property prices are plummeting. Prices for commercial properties and multi-family buildings are dropping with insolvencies and foreclosures soaring. Even house prices are falling. The housing market in Germany is very different from the U.S., Canada and Australia, particularly in the terms and amount of financing available to buy a house for a first-time buyer. […]

Hilliard's Weekend Notebook - NVIDIA, the computer chip and artificial intelligence company, announced excellent results this week, pushing the stock to new highs. The company’s share price has tripled from a year ago, making NVIDIA worth $2.5 trillion. Stock traders were pleased with the optimistic outlook expressed by the CEO. Is Nvidia the single most important stock on the […]

Hilliard's Weekend Notebook - The Biden administration has announced increased tariffs on goods imported from China in several categories, including electric cars, batteries and solar panels. The announcement cites “China’s unfair trade practices” especially in technology transfer, intellectual property and innovation. Will these tariffs achieve Biden’s goals? The tariffs are designed to protect American workers and businesses from China’s […]

Hilliard's Weekend Notebook - The U.S. federal government will set a new record for borrowing this year, in the trillions of dollars. Government deficits reached a record high in 2020, due to government help to the private sector during COVID. But now, even without a crisis, the deficit has soared to new high levels. Will income taxes increase? The […]

Hilliard's Weekend Notebook - The excitement and hype regarding Artificial Intelligence continues to influence stock markets positively. While most people have not yet seen much impact on their lives, billions of dollars are being committed by a multitude of companies who wish to compete for a top spot in the future of AI. Will AI meet current expectations? Is […]

Hilliard's Weekend Notebook - Tesla, Inc. had a closely watched first quarter report, outlining poor results this week. But the markets’ initial reaction was positive, even if the financial results were underwhelming. Why would the market push the stock 10 percent higher after disappointing results? Tesla reported a 9 percent decline in revenue after a previously reported decline in […]

Hilliard's Weekend Notebook - The budget this week contains an impressive number of substantial measures designed to improve housing unaffordability. Will these measures make housing affordable again? Housing in Canada has been more expensive than the average family can “afford” for a long time. The old benchmark from the 1990s was a home should be no more than three […]

Hilliard's Weekend Notebook - The U.S. Consumer Price Index exceeded expectations, growing by 4.8 percent (annualized) in the month of March, while Core CPI rose 3.8 percent from last year. The markets corrected sharply after the surprise as the market expected lower inflation leading to rate cuts. President Joe Biden said that he still expects the Federal Reserve to […]

Hilliard's Weekend Notebook - James Hansen is an 83-year-old climate research scientist that became known in the 1980s for making accurate predictions about global temperature increases. Now, he forecasts that warming is happening even faster than he expected. Will policymakers listen to Hansen this time? His latest paper, a 33-page peer-reviewed report that was published in November 2023, covers […]

Hilliard's Weekend Notebook -   “Well, it’s time to break the glass,” said Carolyn Rogers from the Bank of Canada in a recent speech, referring to the emergency situation in the lack of improvement in productivity in Canada’s business sector.   The Bank of Canada cares about productivity because “productivity is a way to inoculate the economy against inflation.” […]

Hilliard's Weekend Notebook - The Federal Reserve announced that interest rates will remain unchanged. The chairman, Jerome Powell, seemed confident in his remarks that inflation will come down further, while economic growth gets stronger, and unemployment stays at the current low level of just under 4 percent. Powell hinted that rate cuts are coming, starting in June with a […]

Hilliard's Weekend Notebook - A battle is underway in the U.S. over new rules requiring higher equity capital for the banks. Enhanced equity capital protects the bank from insolvency in the event of a financial crisis. Bank lobbyists are fighting hard to keep capital requirements at the lowest possible level while regulators would like higher capital given the historical […]