ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION
February 28, 2023 | Stress Compounding at Higher Rates
Thirteen years of ultra-loose monetary conditions, followed by the sharpest tightening cycle in 40 years, have wrought record household debt service payments (in orange below, courtesy of The Daily Shot) and a record low savings ratio (grey line) Year-over-year growth in consumer debt payments since 2020 (blue line below since 1986, courtesy of Morgan Stanley) has […]
February 27, 2023 | Innovating for Smarter Energy and Transportation
Humans can be so bright and innovative when they try to be…thankfully, many people are. Renewable rooftop power will play a vital role in the decentralised community grid systems of the future. Getting every ounce of power out of available rooftop spaces will be key to making that transition a success. Now a Dutch firm […]
February 23, 2023 | Rosenberg: The Pending Recession
This segment offers another worthwhile macro overview. High-risk warning on the defence and gold mining stock “trade ideas,” as Dave says, only “for those with ice in their veins.” Word to the wise. “There’s not a snowball’s chance in hell we hit the lows in the stock market in advance of a big bond rally.” “I think […]
February 22, 2023 | Grantham: After a Timeout, Back to the Meat Grinder
GMO co-founder Jeremy Grantham’s latest market letter is worth the read as usual; see After a timeout, back to the meat grinder! On equities, Grantham’s base case is that the S&P 500 could fall a further 20% by year-end, for a total real decline of 40% since 2022. My calculations of trendline value of the S&P 500, […]
February 21, 2023 | Surging Homes For Sale and Mean-Reverting Prices
Surging home inventories and mean-reverting prices are excellent for those seeking attractive entry opportunities. But housing downcycles have historically taken an average of four years to bottom. So, patience and cycle foresight are key. The segment below offers some good insight into housing dynamics in different US cities. As in Canada, the areas with the […]
February 17, 2023 | Danielle on Monetary Policy and Markets
Danielle Park of Venable Park Investment Counsel presents her view on Federal Reserve policy, how it ties in with the policy of the Bank of Canada, and the leading indicators she thinks investors should be paying the most attention to.
February 15, 2023 | Consumers Getting Walloped
Good updates in this segment on larger trends in inflation, employment and consumption. Consumer Prices Accelerated in Jan, but Annual Growth Slowed. Here is a direct video link. Meanwhile, as shown below, half of Americans recently surveyed report that their financial situation is worse today than a year ago (dotted line below since 1975). Just 35% […]
February 14, 2023 | Battery Innovation is Booming
Innovative, hard-working people worldwide are focused on ever more efficient, low-cost energy storage, and human ingenuity is winning. NEW Sodium, Aluminum battery is 15X cheaper than sodium or lithium. Here is a direct video link.
February 13, 2023 | Hard Landing in Motion
The speakers take a few minutes to turn on their cameras in this segment, but they get there, and ECRI’s economic cycle update is always worth a listen. Big picture context is useful in avoiding common financial mistakes. Lakshman Achuthan is being interviewed by Dale Pinkert during the F.A.C.E. webinar. Lakshman is calling the pullback […]
February 10, 2023 | VRIC: Stocks, Gold and The Dollar
Our coverage of the VRIC continues with a discussion about the U.S. dollar, and it’s status as a reserve currency, including the role gold plays in protecting wealth and how the dollar’s dominance affects the broader market. Brent Johnson, Danielle Park, Grant Williams, and Russell Gray give their opinions on what is often a hotly […]
February 8, 2023 | The Financial Noose Tightens
The US Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) is used by monetary policymakers to gauge credit conditions. Over the past year, banks have reported tighter lending standards on commercial loans to small, large and middle-market firms (blue bars below since 1990, courtesy of The Daily Shot). This indicator has traditionally led US corporate […]
February 7, 2023 | Equity and Corporate Bond Prices Still Screaming Cycle Top!
So far in 2023, value-indiscriminate buyers are still pounding into the riskiest low-yielding assets with wild abandon. Take BBB-rated bonds-whose credit quality is just one level above “junk.” At past cycle bottoms (attractive investment opportunities), the US Fed had raised short-term rates enough that defaults spiked and BBB bond prices fell more than 20%–enough to […]
February 3, 2023 | EPB Macro: Housing Leading The Economy Lower
This segment reviews US data, but the trends are similar in Canada. The EPB Housing Deep Dive report is focused on the residential construction cycle (the leading sector of the economy). Here is a direct video link. This report is a preview of content exclusive to members of the EPB Research Gold Tier. If you would […]
February 1, 2023 | Bullish Dreams Should Be Tempered By History
January brought gains across most asset classes, especially for the junkiest debt, equities and crypto-Ponzis. The bulls are chomping at the bit to convince us that the 2022 loss cycle is now over. However, it bears noting that big rebounds have been a regularly recurring feature within bear markets since time began. The Bloomberg chart […]
January 31, 2023 | Irrationally Exuberant January Comes to a Close
The US Fed’s next rate announcement is due on Wednesday, and the consensus expects a 25 basis points (bps) increase, raising base rates in the banking system to 4.25 to 4.75% from 0 to .25% one year ago. Lest anyone forget, the Fed is also reducing assets on its balance sheet (QT) by $95 billion […]
January 26, 2023 | Tightening Will Continue To Bite Through 2023/2024
As we’ve noted many times, changes in monetary policy—tightening or loosening—move through the economy at a lag of one to two years. For this reason, the record tightening done by central banks in 2022/2023 will slow the economy into 2024, and any easing efforts in late 2023/24 will not fully be felt until 2024/2025. In […]
January 25, 2023 | Timeless Advice: Don’t Buy Stuff We Don’t Have The Cash For
This clip is ten years old and timeless. Funny because so painfully apropos at every income level. (Thanks, John, for sending this one from the archives). On the other side, of course, we have all the credit pushers brainwashing the masses with assurances that we “deserve credit” and are “richer than we think.” Make it stop! Here’s a direct video […]
January 24, 2023 | ECRI: A Recession Really is Coming
Lakshman Achuthan and Anirvan Banerji are co-founders of the Economic Cycle Research Institute (ECRI), which determines recession dates for 22 economies around the world. Their latest findings are summarized in Don’t be fololed! A recession really is coming: Recession concerns in the US are widespread these days. Yet, some economists argue that the strength of the labor market […]
January 23, 2023 | Hoisington Q4 2022 Review and Outlook
Hoisington Management’s fourth quarter 2022 Review and Outlook is now available to the public on its website here. As always, a concise master class on monetary impacts and the economic cycle, see A Theory of Interest Rate Cycles. The bottom line: growth bearish and investment grade bond bullish: Poor consumer spending over the critical Christmas shopping period, slumping exports, […]
January 19, 2023 | Equities Don’t Bottom When Yield Curves are Inverted
The percentage of global 2/10-year Treasury yield curves inverted at the end of 2021 (long rates lower than short) was 90% (in blue below since 1980, courtesy of Lance Roberts). Historically, recessions (grey bars) and bear markets (S&P 500 in black) have followed when the number of inverted 10-year curves reached 50% (red dotted line). […]
January 18, 2023 | Epic Financial Busts Bring Epic Opportunity
A decade of ultra-low rates punished risk-conscious savers and encouraged profligate financial decisions among the masses. Rather than use record-low interest rates to get out of debt faster, most levered up to imprudent levels. Insufficient cash and falling prices are common themes as pandemic excesses unwind. This will take some time, but for the few […]
January 16, 2023 | Tesla: Zero To Most Profitable in 15 Years
Truly other world… Sandy Munro was blown away by Tesla’s profit margin, which is eight times more than Toyota’s. Here is a direct video link.
January 13, 2023 | Canada’s Housing Downturn Barely Started
Bank economist Robert Kavcic offers useful macro housing context in the Better Dwelling segment below. One caveat worth noting, though: from a price peak in February 2022, a housing bottom by mid-2023 would be an unusually quick downcycle. Meanwhile, the Bank of Canada’s late but great tightening from March 2022 through early 2023 will contract […]
January 12, 2023 | Monetary Policy Changes are Felt Slowly and Then All At Once
Used car prices fell nearly 15% year over year in December, and as shown below, since 1997, prices would need to fall another 30% to return to pre-COVID norms. Monetary policy changes move through the economy in 12 to 24-month lags. This happens for a few reasons. First, many interest rates are fixed for set […]
January 11, 2023 | This Housing Bust is Global
Canada led the world in the most egregiously inflated home prices in the past few years, but New Zealand, Australia and Sweden were other top-risk contenders. Now high debt levels are having similar demand and price-depressing impacts in many countries all at once. See Sweden is facing its ‘day of reckoning’ as house prices plummet: “We […]