ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION
April 13, 2023 | Grantham: This Crisis is Bigger Than Banks
We welcome back a very special guest, and that is billionaire and legendary investor Mr. Jeremy Grantham. I have been continuously amazed at how accurately Jeremy has been predicting future events over the last couple of years that we’ve been chatting. Still, it should be no surprise because he’s one of the few who have […]
April 12, 2023 | Multi-Family Rentals Feeling The Heat
As mortgage rates have more than doubled year-over-year, defaults are spreading through the commercial property space, from offices to shopping centers and rental apartments. A record $151.8 billion backed by US rental apartment buildings is up for renewal this year, and $940.1 billion over the next five years (Trepp data). The good news for tenants […]
April 11, 2023 | Worst of Stock Market Losses Come During Recessions and Rate Cuts
A negative US 10-year minus 3-month yield spread has signalled every incoming recession of the last 60 years (grey bars below courtesy of Charlie Bilello). The current reading, at -1.67%, is the most negative ever recorded. Still, bullish hopes spring eternal. While most economically-sensitive sectors have floundered for two years: small cap stocks (-27% from […]
April 10, 2023 | Taleb on Bitcoiners, Venture Capital Ponzi’s and Plumbers
Taleb is a character, to be sure, and he offers many cogent insights in this segment. I especially resonate with the idea that, unlike sales skills, expertise comes from first-hand risk work: seeing what goes wrong and cleaning up mistakes and messes; then designing systems and approaches to minimize the impact of bad outcomes. The […]
April 7, 2023 | CBC Marketplace: Mortgage Scam in Ontario
Some seniors across Ontario are at risk of losing their homes in an elaborate scam that involves door-to-door equipment rental contracts, low-quality renovations and unaffordable high-interest mortgages. Marketplace speaks to people who feel they’ve been scammed, some on the brink of losing their homes and someone who already has. Here is a direct video link.
April 6, 2023 | Treasury Market Sees Recession, Disinflation and Rate Cuts in 2023
Komal Sri Kumar, Sri-Kumar Global Strategies president, on Loretta Mester’s recent comments on the federal funds rate, what the yield curve tells investors, and more. Here is a direct video link. The chart below (courtesy of True Insights) shows the gap between the US Fed’s stated expectations for a 5.13% policy rate through the end of […]
April 5, 2023 | Credit Earthquake Reveals Fault Lines
The past year has seen the most aggressive Fed tightening cycle in at least 30 years (see the chart below as of March 30, 2023, courtesy of Isabelnet.com). Base effects matter a lot; coming off a decade of constant QE and near-zero interest rates, the “normalizing” of monetary conditions this cycle is particularly acute at […]
April 3, 2023 | Eyes On The Prize
Bear markets can be psychologically trying as interim rallies may obfuscate ongoing downtrends. Markets are liquidity junkies and repeatedly anticipate that central banks will pause and return to easing credit conditions (typically a few months after a pause). As with tightening, however, the bulk of easing effects are not felt until many months after they’re […]
March 28, 2023 | Buybacks Wobble as the Cost of Capital Leaps
Companies pushing up share prices with buybacks (while their executives sell personal holdings into the flow) have greatly supported stock prices (and executive compensation) over the past decade. The party was planned to continue in 2023 with a record $360 billion in buybacks authorized year-to-date. But, as usual, something unexpected happened on easy money street: […]
March 27, 2023 | Shock and Awful in Commercial Real Estate
Over the past year, bonds and mortgage-backed securities dropped in value as central banks hiked base rates in the banking system—that’s interest rate risk. The sound ones also rebound in value as central banks pause and then start cutting rates again. But that doesn’t mean these instruments all have the same risk profile. Government bonds […]
March 26, 2023 | Danielle on CBC Weekend Business Panel
Danielle was a guest with Dennis Mitchell and Hillary Johnstone on the CBC Weekend Business Panel. Here is a direct video link.
March 24, 2023 | Financial Stress Spreading
Deutsche Bank shares are off more than 10% this morning as credit default swaps on its senior euro debt blow out. Contagion fears are spreading after Credit Suisse’s shot-gun sale last weekend. Other banks are tumbling in sympathy. As shown below courtesy of Blomberg, financial shares have plunged sharply in the last month; see Deutsche Bank […]
March 23, 2023 | Fed Wrecking Ball
With consumer credit conditions already as tight as the 2008 financial crisis (shown below courtesy of The Daily Shot), yesterday, the US Fed hiked its overnight rate 25 bps to the highest level since September 2007 (4.75 to 5%). After insisting in 2021 that the Fed would not even consider raising rates in 2022, yesterday, […]
March 22, 2023 | Fed Today and Done?
At the last FOMC announcement on February 1st, the Fed hiked base rates by 25 bps and said it expected to tighten through 2023, with no easing before 2024, at the earliest. That was before retreating bank deposits sparked a liquidity crunch at highly levered financial institutions. Expectations are now that the Fed will hike […]
March 20, 2023 | Rates, Banking, Recession and Markets
Ted Oakley interviewed David Rosenberg of Rosenberg Research with his thoughts on banking situations, interest rates, recessions, and the stock and bond markets. Here is a direct video link.
March 16, 2023 | What Happened to Swiss Banks?
Good big picture in this segment. A global clampdown on tax evasion, led by U.S. law authorities, has transformed the banking industry in Switzerland. Without its famed reputation for secrecy, wealthy foreigners no longer see it as a haven to hide their money. So how have Swiss banks adapted? Here is a direct video link.
March 14, 2023 | Moody’s Downgrades US Banking System Outlook to Negative
Moody’s just announced a downgrade of its outlook on the entire US banking system to negative from stable to reflect “the rapid deterioration in the operating environment following deposit runs at Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank (SNY) and the failures of SVB and SNY.” Danielle explains the nuances of recent developments in the […]
March 13, 2023 | Backstops for Depositors, Not Risk Markets
The Silicon Valley Bank (SVB, founded in 1984) and Signature Bank (publicly traded since 2004) closures over the weekend are the second and third largest US bank failures in history (the largest eight failed banks in assets and deposits, are shown below). Banking failures tend to be contagious. To quell depositor fears, the […]
March 11, 2023 | Loonie and Treasury Yields Diving Together
The US dollar touched a five-month high against the loonie this week (shown below since late 2020, courtesy of my partner Cory Venable) as the Bank of Canada held at 4.5% and hawkish talk from the US Fed increased odds of a US overnight rate of 5% on March 22. With recessionary data and credit […]
March 10, 2023 | EPB Macro: The Real Reason Home Prices are Falling
Well explained, as usual. In this video, we discuss why most of the market was unable to predict the current 2023 housing crash and how this housing meltdown could continue to unfold into the rest of 2023. Here is a direct video link. In January, the combination of a 15% price cut and lower mortgage rates […]
March 9, 2023 | Fed Hangs Tough
FOMC chair Powell disappointed equity markets this week with testimony reiterating his insistence that financial conditions must keep tightening (through higher for longer interest rates and ongoing balance sheet reduction “QT”) amid growing strife throughout the world economy. Indeed, Powell unapologetically explained (and he’s correct) that higher unemployment, lower economic activity and less financial speculation […]
March 8, 2023 | DiMartino-Booth on the Economy’s Masked Collapse
Excellent data and cogent observations in this segment. Danielle DiMartino Boooth fom “Quill Intelligence” discusses the economy and what you can do to prepare for when the masked collapse happens. Here is a direct video link.
March 7, 2023 | Understanding Bond Yields and Mortgage Rates
As mentioned in the segment below, in America, more than 90% of mortgages are fixed for terms greater than ten years, and 95% of existing mortgages are at rates less than presently on offer. And yet, as shown below, since 1977, US mortgage payments to income are already at unaffordability levels seen in the last […]
March 2, 2023 | Tesla 2023 Investor Day Updates on Electrified Energy and Transportation
Tesla’s 2023 Investor Day on March 1, 2023, outlined important context and data for the global transition to electrified energy and transportation. The big-picture data presented here are not new. They have been verified and published by other scientists and engineering experts in this space, including Stanford’s Mark Z. Jacobson and The Solutions Project. And yet, most people are […]
March 1, 2023 | Rate of Change!
The US Money Supply has contracted 1.7% over the last 12 months (graphed below, courtesy of Charlie Bilello)–the largest year-over-year decline on record (data back to 1959). Many other countries, like Canada, have seen a similar trend. This massive liquidity reversal is a formidable headwind for asset markets globally over the next few quarters. At […]