Hilliard's Weekend Notebook - A collapse in bank lending is damaging for the economy, as growing credit is the most important fuel of modern economic systems. Without an annual increase in debt outstanding, a recession becomes almost inevitable. Will the current downturn in bank lending to commercial and industrial clients trigger a recession? Commercial and industrial lending peaked in […]

Hilliard's Weekend Notebook - History will judge that the long period of low interest rates, which endured from 2009 to early 2022 was a colossal mistake. Investors piled into fixed income assets that were extremely overpriced based on rates close to zero. And now most assets that are sensitive to rates are repricing sharply downward. Last week we saw […]

Hilliard's Weekend Notebook - The U.S. stock market sold off this week after the Federal Reserve announced that rates will have to stay higher for longer. But the stock market should be careful what it wishes for. The record shows clearly that rate cuts are usually bad for the stock market and the economy. This week Jerome Powell, chair […]

HoweStreet.com Radio - Scandal plagued Ontario Premier Ford stops Green Belt housing plan

Hilliard's Weekend Notebook - Canada’s Minsky Moment has arrived, as the demand for new credit slows and a substantial portion of household mortgage borrowers are not paying the interest on their debt, much less repaying the principal. Hyman Minsky was an American economist who focused on the business cycle and debt. Since mainstream economics ignores debt, banking and financial […]

Hilliard's Weekend Notebook - The Bank of Canada goes on hold, with no rate hike this week. But those expecting significant interest rate cuts any time soon will be disappointed. The end of the multi-decade period of declining rates passed without much fanfare. But rates in Canada are now as high as they were 23 years ago. This happened […]

Hilliard's Weekend Notebook - While the world’s crude oil consumption will soon start to decline, many investors expect there will be robust demand for crude oil for decades to come. But it is not too early to analyze the impact of declining demand for crude oil when choosing long-term investments. Most investors based in Canada, and especially Alberta, believe […]

Hilliard's Weekend Notebook - The pace of installations for new solar electricity production continues to surprise everyone, even industry insiders. Close to 400 gigawatts of capacity will be installed worldwide in 2023, with forecasts for as much as 563 gigawatts in 2025. Solar is now cheap and easy to install, especially on residential rooftops where permitting is not a […]

HoweStreet.com Radio - Can you expect more housing on the market this fall?

Hilliard's Weekend Notebook - The headline measure was recorded as 3.2 percent from a year ago, while the closely watched core CPI was a more troublesome 4.7 percent. Is inflation beaten yet? In the mid-1970s a concentrated advertising campaign was orchestrated by the U. S. government to demonstrate a willingness to beat inflation at all costs. President Ford named […]

Hilliard's Weekend Notebook - The risk of deflation in China is real. A moderating pace of growth, large private sector debts and a slowdown in the crucial property sector suggest lower income, prices and deflation. Is China entering a debt deflation spiral? China has enjoyed a longer-than-four-decades income and wealth expansion that has rarely happened in the thousands of […]

Hilliard's Weekend Notebook -   The U.S. government bonds were downgraded a notch by the ratings agency, Fitch. This means the safety of the US treasuries has slipped and there is growing concern about the longer-term outlook for debt. Is the U.S. government at risk of default? Economists reacted negatively to the downgrade with Larry Summers calling it “absurd” […]

Hilliard's Weekend Notebook - The Federal Reserve hiked interest rates again, to 5.25 percent to 5.5 percent. This is the highest Federal Funds rate in 22 years. The Fed has stated that it is determined to wrestle inflation back under control, which means getting to its 2 percent target or lower. Has the Fed gone too far in this […]

HoweStreet.com Radio - Are generous bonuses at CMHC justified?

Hilliard's Weekend Notebook - China began a new stage in its multi-year struggle with insolvency among property developers. One of the biggest, China Evergrande, reported losses of US$81 billion this week. Will massive debts of US$207 billion dollars in the property sector drag China down? The property sector started to contract in 2021, after a brief post-COVID surge.  Recent […]

Hilliard's Weekend Notebook - The Bank of Canada raised its interest rate again this week, the tenth increase since March 2022. The new level, at 5 percent, means that many borrowers will face rates of 7 percent and higher on bank loans and mortgages. Why does the Bank of Canada keep raising rates? The Bank of Canada (BOC) set […]

Hilliard's Weekend Notebook - Value investing as a style should be doing better during this period of rising interest rates and growing recession fears. But growth investing continues to perform better than value investing by a wide margin. Will value investors ever dominate again? Value stocks are defined as “cheap” when using metrics like share price to book value […]

Hilliard's Weekend Notebook - The head of the Wagner Group, Yevgeny Prigozhin, staged a coup or mutiny, making accusations about Russian army leadership and the conduct of the war and threatening to bring 25,000 of his mercenaries to Moscow. But he backed down and is now in exile in Belarus. Is the coup a sign of more upheaval to […]

Hilliard's Weekend Notebook - The bear market that started in early 2022 is still intact. Many pundits are making noise about a new bull market, but it is best to ignore those people. The stock market has not completed its full correction yet. What indicators confirm the bear market? A normal bear market lasts until valuations are reasonable again, […]

Hilliard's Weekend Notebook - The Federal Reserve delivered a “hawkish pause” this week. The Fed funds rate was held steady, as the Fed continued to tighten monetary policy and suggested that further rate hikes are inevitable. Will the Fed stay the course until inflation is at its 2 percent target? The official statement says that the Fed is committed to a […]

Hilliard's Weekend Notebook - The Bank of Canada delivered a surprise rate hike to 4.75 percent on Wednesday, reversing an April 2023 decision that paused the interest rate hiking cycle. As a result, mortgage rates, prime lending loans and almost everything else in the debt business will get more expensive. At what point will the BOC stop its rate […]

Hilliard's Weekend Notebook - The latest investment hype is based on widespread investor interest in Artificial Intelligence (AI). Nvidia, a company that makes computer chips for AI, is trading at huge multiples of earnings that have only been seen in extreme bubbles like the dot-com era of 1999. Is AI a genuine investing opportunity? AI is generating a frenzy […]

Hilliard's Weekend Notebook - The Bank of Canada uses more alarmist language in its latest Financial System Review (FSR), a regular report that discusses the risks to the Canadian financial system. Should we be more worried about Canadian banks? Canadian central bankers write an assessment of the health of the Canadian financial system on a regular basis, highlighting risks […]

HoweStreet.com Radio - Commercial Real Estate – empty office towers

Hilliard's Weekend Notebook -   Geopolitical events can move markets, if only temporarily. Crises on a world scale frighten investors, causing them to make hasty decisions that can be harmful to their financial success. Could a geopolitical event cause investor panic? The history of geopolitical events shows that markets can survive most events without much trouble. For example, a […]