November 30, 2023 | Bulk of Equity Losses Happen During Rate Cutting Cycles, Not Before

Reminder: while equity bear markets typically start from full employment and an expanding economy, the bulk of cycle losses (81%) happen once recessions begin (blue bars below since 1933), when the unemployment rate is jumping, and central banks are slashing monetary conditions once more. Canada’s TSX has gone nowhere since June 2021, but propped up […]

November 29, 2023 | Real Estate Cycle Hitting Hard

Each week, more people realize they have too much overhead and need to cut costs. Our family knows several people in all different age groups who bought or borrowed against real estate during the pandemic and are now trying to sell. It’s not going well. It is a very stressful, sad time, and I empathize […]

November 28, 2023 | Where’s The Recession?

November 27, 2023 | Bear Markets Bottom After Central Banks Near the End of Easing Efforts

As central banks resume easing in 2024, a bear market bottom should follow months later. Waiting for cyclical lows may feel challenging, but not waiting ends much worse. Here at the end of 2023, confidence in the economy and the financial markets is a lot higher than it was at this time a year ago. […]

November 22, 2023 | FOMO Turning To Regret For The Majority of Households

As we head into the most-harangued shopping weeks of the year, it is important to understand that spending patterns are strongly tied to the value of homes, particularly among the so-called upper-middle-class households (defined as income over 100k). Now that interest rates have normalized and home prices are falling, even those still fully employed are pulling back […]

November 21, 2023 | Reviewing Private Equity “Roll Ups” in the Health Care Space

The late, great zero interest rate era enabled the levered expansion of private equity (PE) firms, “rolling up” all manner of assets, including private businesses and professional practices. In areas like health care, where fiduciary duty is paramount, the profit-maximizing focus of PE raises some cause for concern. A lawsuit by the US Federal Trade […]

November 20, 2023 | Bear Market in 2024 – but Bonds Have More Fun

  Facts and analysis without the product-pumping sell-side spin–rare and valuable. The overview in this segment is worth a listen. The world has watched intently as the world’s most influential central bank, the Federal Reserve, has implemented the most aggressive interest rate hike campaign in history — on a % change over time basis. But […]

November 17, 2023 | Buyers in Hibernation as Home Prices Fall

From 2000 to 2022, Canadian home prices increased 375% (an average of 17% annually, shown in red below), while the average Canadian wage (black line below) rose 3% per year. In the Greater Toronto and Vancouver Areas, where most of the population lives, median home prices rose 450% and 490%, respectively.     The mania escalated during the pandemic when prices in popular areas leapt 50% between the end […]

November 16, 2023 | BCA: Double-Ddigit Stock Market Drop in 2024

Higher interest rates have sharply increased carrying costs while lowering spending and investment through the economy. Both revenue and profit numbers are broadly in retreat and the urge to cut costs is intensifying. There will be a bottom in equity markets, but it has never come before central banks have resumed easing monetary conditions. Recessions, […]

November 15, 2023 | Inflated Risk Assets Mean Central Banks Tighter For Longer

A flat October US CPI release yesterday inspired both equities and bonds to rally on a growing belief that inflation is decreasing, and the US and Canadian central banks, on hold since July, are done hiking policy rates this cycle. The most abrupt monetary tightening in many decades has thrown a ton of drag on heavily indebted […]

November 14, 2023 | Consumer Spending Plans at Recessionary Levels

The University of Michigan Consumer Survey for November found a fresh low in spending intentions. Consumers citing interest rates as preventing them from buying an automobile (36%) and a home (67%) were the highest since the 1981 and 1982 recessions when the Fed funds rate was 12 and 10 percent, respectively, versus 5.5 percent today. […]

November 13, 2023 | WeWork Bankruptcy Accelerates Real Estate Dominoes

As WeWork filed for bankruptcy last week, billions in commercial real estate leases, loans and property values are up for price discovery. The discussion below connects some of the dots. Danielle DiMartino booth Joins The Replay Booth. Here is a direct video link.

November 11, 2023 | Self-Inflicted Recession in Motion

This segment includes an articulate explanation of the yield curve inversion and its implications. I would add: it’s not just ‘normalizing’ interest rates that has sparked cardiac arrest through the economy, it’s the years of excessive credit creation that preceded it.  Now we have the take back phase. Campbell Harvey, Duke University professor of finance, […]

November 10, 2023 | For Sale Inventory on the Rise

The four Ds drive real estate listings: death, divorce, default, and discretionary. The first three tend to trigger regardless of market conditions. ‘Discretionary’ and default listings tend to rise with interest rates– both are escalating now. Ted Oakley discusses real estate with property market expert Ivy Zelman.  Here is a direct video link.   For those who […]

November 9, 2023 | Lube That Greases World Economy Reflects Global Downturn

US lubricant consumption has fallen to the lowest level in at least 42 years, according to Bloomberg Opinion calculations based on data from the Energy Information Administration and reflects a cyclical slowdown globally. See The Lube that Greases the World Economy Says Beware 2024: Wherever one looks, from Europe to the US to China to India, […]

November 8, 2023 | “Serious slowdown” as Global Liquidity Contracts

This discussion offers insight into the origins of QE and what follows as fund flows reverse (QT). Richard Werner, Professor of Banking and Economics at the University of Oxford, regarded as the “Father of Quantitative Easing”, discusses the future of monetary policy. Here is a direct video link. Of course, it is not just quantitative tapering […]

November 7, 2023 | Dash for Cash Intensifying

More than a decade of near-zero interest rates spawned a generation of bonkers financial decisions. Now, we are in the reveal and clean-up phase. Unlike fixed-term mortgages, other forms of credit quickly change with overnight policy rates set by central banks.  As shown below, since 1960, courtesy of the Daily Shot, non-mortgage interest payments now […]

November 6, 2023 | Fed on Hold as Economy Weakens

Danielle DiMartino Booth, CEO and Chief Strategist at QI Research, joins Bloomberg Radio to discuss the FOMC decision. Here is a direct video link.

November 2, 2023 | Lacy Hunt on The Impending Recession and Implications

A worthwhile review in this 1-hour segment. Legendary economist Dr. Lacy Hunt joins Julia La Roche on episode 115 for a wide-ranging discussion on the economy and why we’re facing an impending recession. Here is a direct video link.

November 1, 2023 | What Interest Rates Say About Home Prices

The average home price in Canada ($757k) is about 141% higher than what is considered affordable for the average household income. In the highest-population areas, like the Greater Vancouver and Toronto Areas, where incomes and home prices are higher than the national average, the affordability numbers are much worse. Price-to-income ratios in the mid-west and […]

October 31, 2023 | China’s Real Estate Bust Has Global Implications

The International Monetary Fund warned this month that the downdraft in China’s real estate sector has contagion implications globally: In the near term, the sharp adjustment in China’s heavily indebted property sector and the resulting slowdown in economic activity will likely spill over to the region, particularly to commodity exporters with close trade links to China. Beyond […]

October 30, 2023 | Stock Market Likelihood is Lower for Longer

  The average time from a yield curve inversion (long-interest rates below short) to the onset of recession has been ten months historically, ranging from 11 to 22 months. October marks the eighteenth month of curve inversion this cycle. Moreover, since June, the yield spread has been flattening out. As we start this trading week, […]

October 28, 2023 | Re-Steepening Yield Curve Signals Financial Trauma in Motion

In the past few months, short-term treasury yields have risen more than long-term such that the yield curve, which has been inverted since April 2021, is now un-inverting. This move typically signals the near-term onset of recession and the worst stock market losses. The chart below from my partner Cory Venable shows the move in […]

October 27, 2023 | Canadian Recession is Here

David Rosenberg, founder & president of Rosenberg Research and Ed Devlin, founder of Devlin Capital, senior fellow at C.D. Howe Institute and former head of Canadian portfolio management at PIMCO, join BNN Bloomberg to discuss their economic outlook. They say that even as many believe a soft landing is still accomplishable, there are some metrics […]