ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION
August 2, 2023 | Dan Ariely: Don’t Make These Money Mistakes
When it comes to money, because it’s so quantifiable, you’d expect people to make very rational decisions. But they don’t. Because we’re humans, we’re more driven by our evolutionary wiring and our emotions. We make “predictably irrational” decisions, as today’s guest expert would say. Dan Ariely is the James B. Duke Professor of Psychology and […]
August 1, 2023 | Rising Stock Markets Overlook Broad Economic Deterioration
The year-over-year leap in the Fed Funds Rate (inverted on the lower right in orange) is leading ISM new orders down (green line on the lower right). ISM new orders (lower left, in orange, since 2002) lead corporate revenues (green). The chart below, courtesy of Francois Trahan, suggests the trends in motion. Jubilant corporate bond and […]
July 31, 2023 | Lacy Hunt: Incoming Credit Crunch and Recession
This discussion offers an important overview of current financial conditions and what they suggest from here. Dr. Lacy Hunt says a credit crunch is now at hand that will start freezing up the gears of the US economy. Here is a direct video link. Hoisington’s Q2 2023 Quarterly Review and Outlook is available at this link.
July 26, 2023 | Conditions Least Favorable for Equities Since 2007
For those who pay attention to risk/reward dynamics, the prospective compensation for equity risk over Treasury bonds is today the lowest since the market peak in 2007-08 (S&P 500 forward earnings yield minus the ten-year Treasury yield). David Rosenberg, founder and president of Rosenberg Research, talks about the lasting effects of Covid-19 stimulus checks on […]
July 25, 2023 | Canadian Equity Market: High Capital Risk Amid Falling Earnings
Canada’s TSX index has rebounded 6%, year-to-date, while its corporate earnings have contracted. As of today, the S&P/TSX Composite is expected to report a Q2 (year-over-year) earnings decline of -20.4%, compared to the estimated (year-over-year) earnings decline of -17.4% on June 30 and the estimated (year-over-year) earnings decline of -12.5% on March 31. See Canada Earnings […]
July 24, 2023 | Moody’s: Financial Conditions Pose Growing Threat To Non-Banks
A new report from Moody’s highlights the clear and present risks posed by “less regulated and transparent parts of the global financial system.” In particular, financial institutions carrying “more leverage, less liquidity and weak risk management will find it harder to navigate the cycle.” But wasn’t this time supposed to be different? See Shadow Banking Stress Lurks, Moody’s warns: Tighter […]
July 21, 2023 | Fat Pitches and Market Cycles
Near-zero interest rates and trillions of asset buying by central banks (QE) enabled twelve years of increasingly deranged financial behaviour between 2011 and 2023. In the process, gambling became an international preoccupation, and investable assets were traded to uneconomically high valuations. A global standout, at the market peak in 2022, the S&P 500 index (shown […]
July 20, 2023 | The Elevator Pitch for Capital Preservation
The challenge is to explain complex systems in simple enough terms that people can comprehend. I attempt to do this every day in finance. But people can be hard to help. We have to want to learn and remember why capital preservation is our dominant goal. Financial enlightenment is made harder because most “experts” in […]
July 19, 2023 | Those Who Overlook History
Like today, soft-landing hopes were all the rage in the summer of 2007 too. The US Fed tightened its overnight rate from 1% in May 2004 to 5.25% by June 2006 and then paused there for 15 months. As the economy slowed and credit stress mounted, the Fed administered a first cut (50bps) in September 2007, and […]
July 18, 2023 | Real Estate Speculators Start to Blink
Nick Gerli, Reventure Consulting Founder and CEO, joins ‘Last Call’ to explain his recent viral tweet claiming AirBnB is seeing declining revenue in several major markets. Here is a direct video link. Also, see Nick’s update on developments in the commercial property sector. Commercial real estate values have already dropped 11% in the last year, with […]
July 15, 2023 | Danielle on CBC Weekend Business Panel
Danielle was a guest on the CBC Weekend Business Panel. Here is a direct video link.
July 14, 2023 | Hard Landing, New Stock Market Lows Ahead
As we enter the second half of 2023, the economy continues chugging along. GDP growth for Q2 is currently estimated at 2.3%, and inflation continues dropping, with the latest June headline CPI just in at 3.0%. Have those warning of recession been wrong? Or will the lag effect result in a bumpier ride for the […]
July 13, 2023 | Housing Inventory to Explode Higher
Home prices in the US peaked a year ago in June. Since then, transactions have noticeably cooled as mortgage rates have skyrocketed. And while prices have declined in a number of markets nationwide, the correction so far has been quite mild. Are the housing bears wrong? Or are things going to get notably worse from […]
July 13, 2023 | Central Banks Holding The Hand Brake
The June US Consumer Price Index (CPI) came in at a 3% annualized rate, down from the pandemic-inflamed peak of 9.1% a year ago. FOMC chair Powell has said that ‘super-core’ services ex-shelter (which excludes food, energy, rent and used car prices) is his preferred inflation gauge, and (as shown below) it came in at […]
July 12, 2023 | Corporate Bankruptcy Wave Just Started
Unlike government bonds that typically rise while stock prices fathom bear market lows, higher-risk corporate bonds tend to fall with risk appetite and equity prices. That trend has held over the past 15 months as most corporate securities have lost value. As US junk bond prices have tumbled, their yields have risen to around 8.75% […]
July 11, 2023 | Yields Testing Resistance (and Nerves)
The Visual Capitalist chart below shows the pace (in months) and percentage points of Fed hiking cycles since 1988 and confirms that the 2022-23 cycle (in yellow) has, by far, been the sharpest in at least 35 years. In the process, interest-sensitive assets–commodities, bonds, equities and real estate–have all sold off. In the last week, […]
July 7, 2023 | Higher Debt Costs Are Economic Death By A Thousand Cuts
Fed minutes on Wednesday telegraphed that voting members plan another 25 bps rate hike this month and 25 more by November. Market implied rates are shown below in blue versus expectations last week (pre-minutes) in orange. While rate cuts are expected to follow from December 2023 through September 2024, the magnitude of easing anticipated is […]
July 6, 2023 | Insolvency Bull Market
Insolvency trustees are the financial undertakers. They endured a bear market when easy credit enabled extend and pretend habits for the masses. Now the undertakers are entering a boom time as their phones “ring off the hook.” Hoyes, Michalos published Canadian stats through the end of May and included this chart. Other trustee firms are also feeling […]
July 5, 2023 | Protracted Hangover For Real Estate Investors and Lenders
The seemingly endless party of growth in real estate supported by ever-cheaper finance has reached an end, with a protracted hangover now ahead. This has broad implications for the many sectors that feed off real estate and is why realty-led recessions have historically been the harshest. See, Industries that rely on thriving downtowns suffer, and Office turmoil […]
July 2, 2023 | Worst is Yet To Come For Stocks
Some lucid assessments in this segment. When the road ahead is uncertain, there’s no wiser choice than to listen to those with experience – who have seen enough market cycles to judge what’s most likely to happen next. Today we’re fortunate to welcome financial advisor Ted Oakley, managing partner & founder of Oxbow Advisors. Ted […]
June 30, 2023 | Sober Time
After debauchery comes the hangover; this one is far-reaching. Demand for pricey timepieces from the top Swiss brands has cooled amid slowing economies, higher interest rates and the crash in cryptocurrencies, according to data compiled by London-based Subdial, a dealer in pre-owned watches. Prices peaked in February of last year following an unprecedented surge during […]
June 29, 2023 | Repurposing and Repricing Real Estate
Between 2010 and 2022, increasingly slack monetary conditions added trillions to the global money supply, and it was all looking for something to do. Some flowed into ideas and efforts to improve life on Earth. A lot more was thrown at unproductive, counter-productive and mathematically challenged pursuits. Private and public investment funds ballooned on the […]
June 28, 2023 | Leaping Short-Term Rental Supply
A survey from rental site Vacasa showed that 90% of summer travelers this year changed their plans for travel to be more budget-friendly, including choosing driving over flying or choosing a cheaper day to travel. At the same time, active US short-term rental listings reached 1.4 million in April 2023, an 18% jump compared to the […]
June 27, 2023 | Credit Contagion Drives Distressed Selling in Real Estate
Thirteen years of record-low interest rates drove record public and private capital into all forms of real estate and related credit/securities from 2010-2022. Now, sharply higher interest rates and contracting credit on offer are bursting the bubble as forced sales rise. One broker estimates that 90 percent of office buildings in New York were distressed […]
June 26, 2023 | Taleb on Looming Crisis: The Risk is in Front of Us
Nassim Taleb, Universa Investments scientific advisor and author of ‘The Black Swan’, joins ‘Squawk Box’ to discuss the markets and economy, why a bubble is looming, the state of cryptocurrency, and more. Here is a direct video link.