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May 26, 2023 | Tech Mania Magnifies Downside From Here
In the latest AI-driven chapter of mania, chipmaker Nvidia has leapt 186% year to date and is trading about 15% above its November 2021 top. At less than $50 billion in expected 2023 revenue and a current market cap of $1 trillion, the stock is trading about 44x expected sales. Pure madness. There’s no math […]
May 25, 2023 | Deflationary Forces on Deck
Will Debt Debate Finish the Fed’s Inflation Battle? — DiMartino Booth joins Charles Payne of Fox Business News to discuss. Here is a direct video link. As shown below, inflationary pressures have come off hard year over year (Trueflation data here). As monetary and fiscal forces contract, recession, rising unemployment, excess supply, and overcapacity are formidable […]
May 24, 2023 | Now Playing: 6th Major Housing Downturn Since 1960s
The median new US home in April sold for $420,800 -15% lower than the peak last October. Less spending is evident in home improvement spending too. Yesterday, Lowe’s joined Home Depot in announcing a year-over-year decline in same-store sales (the first since 2009) with a marked fall-off in big-ticket purchases. Higher interest rates and falling […]
May 23, 2023 | Largest Property Owners Strategically Defaulting on Mortgages
Some property owners are defaulting on mortgages because they lack the cash flow to make payments; others are defaulting to cut investment losses and hand properties over to lenders. See, Top property owners are credit-worthy–they might default anyway: “The thinking was that the institutions would be the last to give the keys back, but it may […]
May 20, 2023 | Chinese Property Market in Turmoil Too
The segment below offers interesting insight into the Chinese real estate cycle as the easy credit era ends. Similar trends are happening around the world, all at the same time. The May Day Golden Week used to be one of the peak seasons for real estate sales in China. However, this year’s May Day holiday […]
May 19, 2023 | Price Discovery Coming For Realty Sector
Historically it has been typical at the beginning of real-estate downturns for listings to decline as owners try and extend loans rather than sell properties at lower prices. That has happened over the past year with residential and commercial properties. At first, this suppresses inventory for sale and reduces price discovery, stalling the clearing process. […]
May 18, 2023 | Some Thoughts on Tipping
In Ontario, the general minimum wage, including liquor servers, bartenders and waiters, is $15.50 per hour. In some areas of the US, the minimum wage for tipped services is, unbelievably, $2.13 per hour, the same minimum that was established in 1991. Tipping in the United States is on the rise, and experts are calling it […]
May 17, 2023 | Outlook Sours on Tight Credit and Fewer Loans
The May 2023 Dallas Fed bank credit survey results were just released, and the data is recessionary. It’s not just consumer credit that’s in decline. Commercial and industrial loans have contracted at a 14% annualized pace since mid-March and loans to commercial real estate at a -4% annualized rate. See Banking outlook continues to deteriorate amid further […]
May 16, 2023 | Stressed Consumers Pulling Back
The segment below offers a good big-picture overview of the interplay between incomes, consumer spending, economic growth and home prices. Canadian data looks worse than the US, but, so far, Canadian banks have allowed negative amortization to compound principal higher where payments are insufficient to cover principal and interest payments. Many variable-rate borrowers have had […]
May 15, 2023 | Baby Boomers Helped Inflate Property Prices, Their Demise Suggests The Opposite
Baby boomers and two decades of rock-bottom interest rates drove a structural boost to housing demand as older buyers/investors sought bigger homes as well as recreational and rental properties. As interest rates have risen and boomers die off, the question is who will buy from them and at what price? The pandemic and a shortage […]
May 12, 2023 | Canadian Insolvency Leaping
Pandemic-era debt deferrals, government handouts and easy credit all worked to kick insolvency problems down the road. Now many are out of extend and pretend options. Doug Hoyes, co-founder of Hoyes, Michalos & Associates, joins BNN Bloomberg to discuss the record number of consumer proposals in Canada. He says that the upward trend in insolvency […]
May 11, 2023 | The Loudest, Least-Skilled Financial Influencers are Most Followed
A paper from the Swiss Finance Institute‘s working paper series tracked data from more than 29,000 finfluencers on financial social media site StockTwits and came to some predictable conclusions. Those with the least skill tend to be the most followed. The democratization of finance? Not so much; see, Investors flock to loudest, least skilled voices on social […]
May 10, 2023 | Contracting Credit Leads Economy and Equities Lower
Eyes on the recessionary bear prize. Valuable investment opportunities are in the making. Peter Boockvar, Bleakley Financial Group CIO, joins ‘Squawk Box’ to discuss the results from the Fed’s quarterly Senior Loan Officer Opinion Survey, and why a recession is likely unavoidable. Here is a direct video link. The chart below shows the Senior Loan Officers Survey […]
May 9, 2023 | It Pays to be Big-Picture Aware and Disciplined
Three-quarters of NASDAQ companies have reported Q1 2023 earnings thus far, and the aggregate year-over-year EPS decline is 10.2%. After rebounding 17% year to date, the NASDAQ remains -23.4% from its peak in November 2021, and the average individual brokerage portfolio is down 27% over the same 17 months. Canada’s S&P/TSX Composite is expected to […]
May 8, 2023 | DiMartino Booth on the Fed’s financial demolition
Danielle DiMartino Booth, CEO and chief strategist at QI Research, returns to Forward Guidance to share her thoughts on May 3rd’s Federal Reserve’s meeting of the Federal Open Market Committee (FOMC) as well as the ongoing issues at several regional U.S. banks. Here is a direct video link.
May 4, 2023 | Bianco on What Bank Failures Mean for Overall System
Will spreading strife in banks prompt the US Fed to pause its tightening efforts this month? We will soon find out. Some worthwhile insights in this segment… We’ve had the 2nd, 3rd, and 4th largest bank failures in American history in the last two months, notes Jim Bianco. He discusses what collapse of First Republic […]
May 3, 2023 | Monetary shock with negative impacts through 2023 and 2025
An April 2023 NBER paper warns that the Fed’s rapid tightening actions since 2022 were a monetary shock that has negative economic impacts for this year and next. Mind the lags. See Does Monetary Policy Matter? The Narrative Approach after 35 years; the conclusion: “Based on the empirical estimates of the effect of previous shocks, one would expect substantial negative impacts […]
May 2, 2023 | Three Of The Four Largest US Bank Failures Have Happened Since March
A decade of near-zero policy rates allowed banks to boost profits by paying next to nothing on customer deposits from 2011-2021. Then, everything changed. Below is a list of the largest seven US bank failures by asset size courtesy of BankRate.com. Suddenly and all at once, three of the four largest have happened over the last […]
May 1, 2023 | Hoisington Review and Outlook First Quarter 2023
Hoisington Investment Management’s First Quarter 2023 Review and Outlook is now available; see Financial Cycles lead Business Cycles. The bottom line is that (lagging) inflation is receding with economic activity. Rising unemployment and higher government bond prices (falling yields) are par for this course as riskier assets keep losing lift. “…with low or declining economic activity, […]
April 22, 2023 | Back to ZIRP?
Good big picture discussion in this segment. When today’s guest was last on this program in early February, he warned that markets were “in La La Land” — meaning they were too optimistic at a time the macro data was warning of an approaching recession. Well, here we are, a quarter later and — after […]
April 21, 2023 | Canadian Stock Buyers Paying up for Negative Earnings
About 200 companies in the TSX Composite index are expected to report Q1 earnings over the next month. Although it’s typical for companies to “beat” lowered earning estimates, the earnings trend is recessionary, with a second sequential quarter of negative growth in 10 of 11 sectors. See Factset, Canada Earnings Season Preview Q1 2023: Analysts lowered […]
April 20, 2023 | Jacobson: Renewable Energy Here and Now
Mark Z. Jacobson’s latest book No Miracles Needed. How today’s technology can save our planet and clean our air lays out the facts on why and how we transition to more efficient, cheaper, cleaner energy. He offers an excellent overview in the presentation below and answers common questions and concerns at the end. Well worth listening! Understand the […]
April 19, 2023 | DiMartinio-Booth: The Credit Crunch is Ahead
Believe it or not, the violent monetary tightening of the last 13 months has only started to be felt throughout the economy. Job losses are just beginning to drive the lagging unemployment rate up from cycle lows. As risk markets rebounded of late (again) in the prospect of coming rate cuts, the credit crunch lies […]
April 18, 2023 | New Financial Mantra: “Stay Alive ’til ’25”
The sharpest monetary contraction in decades (US M2 below since 1960) has hit highly leveraged people and sectors like a meteorite from outer space. After twelve years of TINA reaching for yield and levered gambling, a new financial mantra is sweeping the land: survival. Real estate investors are increasingly responding to the math of higher […]
April 14, 2023 | Rosenberg: Recession is Part of The Business Cycle
David Rosenberg, founder and president of Rosenberg Research, joins BNN Bloomberg for his reaction to Canada’s latest rate hike decision. Rosenberg adds investors should be focusing on what the BoC will say 6 months from now as the jobs market will be completely different. Here is a direct video link. Recessions are a regularly recurring […]