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July 12, 2024 | Canada Lags Far Behind Other Countries in Expenditure on Research and Development as a portion of GDP
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 […]
July 5, 2024 | An Early Indicator of Recessions is Very Useful For Investors
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 […]
June 28, 2024 | The Financial Stability Report Highlights Some Warnings About The Health of the Canadian Financial System
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 […]
June 21, 2024 | Massive Glut in Solar Panel Supply Pushes Prices Lower
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 […]
June 14, 2024 | The Canadian Housing Bubble Needs To Burst
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 […]
June 7, 2024 | Bank of Canada Cuts Rates and Sends The Market a Signal
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. […]
May 31, 2024 | German Property Price Crash Will Not Become a Crisis
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. […]
May 24, 2024 | NVIDIA Could Be The Most Important Stock on The Planet
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 […]
May 17, 2024 | The Biden Tariffs Against China Imports are a Mistake
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 […]
May 10, 2024 | The U.S. Government Sliding Deeper and Deeper into Debt
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 […]
May 3, 2024 | Artificial Intelligence is an Existential Threat to Humans
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 […]
April 26, 2024 | Tesla Reports Poor Results and The Share Price Spikes Higher
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 […]
April 19, 2024 | The Canadian Government Makes Impressive Attempt to Solve Housing Unaffordability
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 […]
April 12, 2024 | CPI Shocker Could Affect The U.S. Election
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 […]
April 5, 2024 | Famous Climate Scientist Heats Up Debate with a Bold Prediction
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 […]
March 29, 2024 | Canada Declares an Emergency as Economic Productivity Growth Lags Far Behind
“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.” […]
March 22, 2024 | The Federal Reserve Believes The Soft Landing Myth
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 […]
March 15, 2024 | Banks are Fighting Proposals for Tougher Regulatory Rules
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 […]
March 8, 2024 | Apple Struggles with Slumping Sales in China
China and the iPhone are closely linked, as sales in that country are a key to Apple’s success. China is going through an economic slump which shows up in sales of Apple’s most successful product, the iPhone. Recently competitors in China have been growing sales faster than Apple. Is a China sales slump for the […]
March 1, 2024 | Warren Buffett is at a Crossroads
Berkshire Hathaway, the investment vehicle of Warren Buffett, reported results for 2023 and Buffett left investors with some pearls of wisdom in the accompanying letter to shareholders. As Warren Buffett explains, investing is not easy, but it is very rewarding, if good decisions are made more often than bad ones. But Buffett states that it […]
February 23, 2024 | China Could Be The World Leader in Nuclear Power by 2030
China is growing its nuclear power generation capacity. Already the world leader in solar and wind, China threatens to take the lead in one of the most talked-about clean energy formats, nuclear power. Will China pass the U.S. and France in generating electricity from nuclear fission? China has announced aggressive targets for nuclear power generation […]
February 16, 2024 | Commercial Real Estate Slump in U.S. Could Trigger a Crisis
Commercial real estate is a major asset class for businesses, institutional investors, and banks. For decades, most lenders were eager to accept commercial real estate as collateral for loans. Also pension plans and insurance companies regarded properties like office towers as safe, long-term investments. But doubts are appearing over the quality of those holdings with […]
February 9, 2024 | China Struggles with Weak Stock Markets
China starts 2024 with drastic measures to head off further losses in the stock market. These actions echo government rescue efforts in 2021-2023 for the property market which have been unsuccessful. Could China stock markets rebound this time? The meltdown in Chinese stock markets is historic. This chart shows the cycles over the period from […]
February 2, 2024 | Canada Might Abandon Its Inflation Target in a Recession
The Bank of Canada (BOC) held interest rates steady at 5 percent in January, highlighting growing weakness in the Canadian economy. But unfortunately, inflation is not declining as fast as the central bank would like. Will the central bank abandon its inflation target? While the weakness in the economy would normally allow the Bank of […]
January 26, 2024 | Tesla Debuts a New Inexpensive Sedan
Tesla announces a new low-cost sedan which will sell for about $25,000 in U.S. dollars. This vehicle will be available in mid-2025 and will be manufactured initially in Austin, Texas. Will this new model be enough to justify Tesla’s valuation? For the 2023 year Tesla announced revenue of $25 billion while the stock market value […]