Markets Calling for More Rate Cuts from the Bank of Canada - The Loonie Hour Episode 145
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- Опубліковано 16 жов 2024
- Twinkie bets are live! Markets are calling for a rate cut next week and more to come. Lagging shelter inflation could bring CPI even lower. More pain to come for Real Estate developers. Political volatility is increasing. The death of ESG and DEI?
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Rate cuts commence in July 2024, taking 6-8 months to complete. A potential crash, if any, might occur by March 2025. The soft landing narrative is gaining traction, making this big recession everyone is calling for less likely. With $1 million from a business sale, I'm seeking profitable investment opportunities for the next 3 years.
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I've been watching you guys for about a year and a half now and I still appreciate your insights. I don't have the bandwidth to keep up on the topics you guys discuss so I absolutely need this podcast. Keith, Steve and Rich, you're the perfect balance of real people & professionals, please keep up the great work. Cheers.
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I think Rich is mistaken about DEI leaving. They're just rebranding and going more below surface level. HR is still going to be pushing the same overall policies, you can see it right in Microsoft among other companies press releases.
I hope not but you're probably right.
I always wondered, especially after living in other countries such as India, how much new Canadians send back to their home countries every month. I know a lot of families rely on their young family members living a working abroad to send money home every month. I wonder if that amount of money leaving the Canadian economy is substantial in any respect and growing in recent years.
Always look forward to the Loonie Hour 😊
"Last week statscan increased the weighting of the mortgage interest basket"
Statscan follows a methodology for this; they do it every year and it is something you can and should anticipate. When mortgage interest goes up by 30% YoY, don't be surprised when it also increases in basket weight. I commented to this extent several months ago. And yes, it causes a systematic under-reporting of inflation, because components reach their peak weighting at about the same time when the price peaks.
Keith is based af.
If we do hit a situation where there are significant housing price drops, I think it's likely to cause a cascade because of all of the risk we currently have in the market. Marginal landlords losing money every month, with rents falling, fixed-payment variable mortgages renewing and possibly even being underwater, an increased jobless rate (possibly with part-time jobs masking some of the actual damage), and perhaps some fraudulent mortgages as well.
> if the cost of a core good falls we will be worse off
do you see what a complete joke Canada is?
@@edubmfagreed
You guys always say Calgary/Alberta is an exception to declining prices, can NB/Moncton get some positive market attention shoutouts too :)
NB represent!
How is that good that Stats Can can change the basket weighting? What controls are in place? Governance?
In the Okanagan, rents peaked 12 months ago as well. Pretty much flat since then.
Castanet just had an article talking about 20% yoy
How is the housing Halifax market so ridiculously high?? There's barely any condos, and what's there are prices close to Toronto and Ottawa. It makes no sense. There's no industry or population or opportunities, just lots and lots of lyme disease.
It's way worse than you think. People are looking at what they see, not the unseen.
These guys say recession because people are paying 10k more on their mortgage.
No - they lost 10k a year and the way bigger 50k a year in appreciation stopped.
Without this latter figure *nothing* in Canada adds up. Enjoy.
@@edubmf fair
I don't know what you guys are seeing but there are plenty of small businesses that have closed up shop in Metro Vancouver. If it's not clear that we've had a hard landing based on todays retail data, it will become obvious later as we continue trending in this direction.
I can say a lot of contractors doing residential work are finding that home owners just aren't willing to spend the money on bigger projects right now.
From the Trump speech ... "drill baby, drill". He wants cheap energy. Hello Keystone?
Who wouldn't want cheap energy? Oh right, Trudeau, Butts, Guilbeault, etc
Its a given finanancial assets will correct by a minimum of another 20 percent the resl question is can it be contained at that level and is quick or is a slow burn of 5 to 10 percent a year for 3 to 5 years
36:13 investors and home owners are seeking liquidity from equity in homes to pay off debts and oay back missed mortgage payments, when they go to the banks, they are denied access to their equity unless they sell the home. this seems like quatatitve tightening.
How do we invest to take advantage of the upcoming Project 2025 policy change?
Great episode, gents!
At this stage we need to see rents and home prices to actually drop not just slow. Leveraging to real estate is way too high. I really can't see BOC dropping their rate below 3.5% anytime soon because of the real estate sector. And a soft landing? I just can't see that with the Canadian economy vs the real estate sector so incredibly divergent.
Real estate prices were out of hand back in 2009. Wages haven't even come close to tracking home prices for 20 yrs and house prices are still over 25% above long term trend lines for the industry.
WRT to the July cut. BOC will cut. But then they won't in Sept.
What happens to all the pensions that have invested into all this? CPP, AUPE, LAPP etc?
@@steveshideler1333 Depends on their exposure to real estate, percentage wise.
Everybody, and every corporation will and can adjust. Developers will adjust. Funds will compensate.
In the bigger picture, the mishandling of the real estate industry has been epic. For 24 yrs, the govt and the industry ignored run away inflation in values. Nobody had a strategy and targets for supply. They had no plan. Meh build family units? Duhhhhh. Even with planned gov't developments the city council only was obsessed with building public housing. And their requirement for family units in Regent park or Atkinson coop redevelopment on the private side? 2%. They are clowns.
They allowed private values to become completely detached from wages because they had no plan for supply and they loosened the mortgage rules so people could use HELOCS to leverage themselves by buying another home or 2. The changing of mortgage amortization periods was catastrophic and all of the agents and industry insiders just shrugged and laughed as their fees blew through the roof. Still asking 5% after a 600% run since 2002?
Markets correct. It's part of capitalism. It makes things affordable. Risk makes people be careful with their money. We've had none of that in the real estate industry.
With the amount of money printed they already have basically dropped. If house prices aren't appreciating they're effectively depreciating
@@drewmueller4609 true. But relative to wages it’s nothing so far.
@@steveshideler1333if they lost, they lost. That’s why it’s called investment, not saving accounts.
No wage increases for 90% of the workforce, and inflation has slowly taken away all our savings, no one has 20% down so keep praying as the next shit storm is Stag inflation and that's a 20-year fix to repair but thanks for all the bidding wars and getting everyone into the market who couldn't afford it, and everyone knew.
Steve, what happened to your Harper interview? I can’t find it
He didn't do an interview with Harper. There was a clip of a Harper interview in Steve's last or 2nd to last Saturday show
@@kqh123 Ah, thanks. It may have been a Jay Martin interview I was mixing up with Steve in my head. I remember Harper predicting “debt overhangs” for governments a long time ago in that interview. I want to rewatch that interview after the discussions on this episode but can’t find it.
@@samalexander5236 Harper did do an interview w Jay Martin (2 yrs ago?). Steve had a clip of that interview in one of his Saturday shows as well.
@@samalexander5236 haven’t interviewed him. I did have Poilievre on the show a few years back
@@saretsky Right, for some reason I was mixing up the Jay Martin/Harper interview in my head with you having done that. The Poilievre interview was great though. Thanks for responding Steve.
Because the Bank of Canada does what the markets demand, not what inflation demands. I did not know that.
Rich, even if market rents have peaked, it doesn't mean CPI rates have peaked. Market rents can be falling while still being much higher than what the average renter is paying, because the average renter includes people with a decade of rent-control. At the margin, people paying past rents leave the pool, and people paying market rents enter the pool, and so the average rent paid among renters can be much lower than the market.
This was a great episode. The summary at the end was perfect.
Great Job!!! Thank You... :-)
Keith always talks about positioning for the sovereign debt crisis but he never mentions how
You need to pay his fancy management fees to find out
The chorus of politicians, bankers, pundits and speculators like Steve telling the BOC what to do only confirms for international investors that Canada has no independent monetary policy whatsoever and this portends more recklessly low rates to prop up the housing debt bubble. Why would anyone in their right mind want to hold Loonies?
they might hold loonies because they live in canada and they use the loonies to buy things because if you live in canada usually you use the Canadian currency to buy things. it's just a guess tho.
Rich’s top call still holding through 2 trading days!
Why do we want continued housing price appreciation like it’s been if we’re now going back to a labour market where capital has the leverage over labour and given that homes are still completely historically unaffordable relative to current wages? It’s intended to be a dwelling not an investment vehicle and as Keith and Rich have both outlined on this pod, it is a non-productive asset. Maybe all these overnight realtor converts can go find work elsewhere rather than riding the coattails of a speculative bubble in dwellings.
I'm a closet loonie hour fan
Come on out buddy.
Who’s behind Austin Private Wealth LLC? 🧐
Prices / incomes have to match people know even with low rates homes are unaffordable taxes, fees, insurance and food no money left
Great episode thanks as always!
All signs point to bitcoin going up a lot.
The muppet boiler room condo flipping market is dead 😂😂😂😂😂
6:06... Agree.
great show as ujsual
Central bank cuts historically are bad, not good. Crap gets worse with every cut
Narrow path forward
-Maud Dib aka Trudeau
I disagree.... in my view the current BoC leadership team under MacKlem has shown a high degree of competence vis-a-vi the extremely difficult and sometimes outright contraindicative economic atasets presenting.
The Canadian debt situation fundamental is precarious at best..... compounded by anemic servicing gdp/gdi, a gdp highly reliant on now unsustainable Debt expansion no longer 'fundable' in future gdp capacity ?
The Debt party is over in Canada.....
how one steers the Car into the ditch with the least amount of damage will always be '20/20' in hindsight.... regardless, that Car IS going into the Ditch !
I bet they'll cut 50!
Secret Service hiring agents with roofing experience 🤪
Canada is already in a recession, albeit a mild one...so far anyway. It could get worse.
Get Lyn Alden on.
GM, Happy Friday.
gm
So boring 😴 that I fell asleep for the first time. Yawn 🥱. Wake me up!!
I'm with Rich on the Trump thing (ew I can't believe I'm siding with a socialist 🤢jk Rich). Not everything leads to civil war. That said, it's not off the table. And when it comes to the DEI thing in government, I would prefer their trained killers to be less effective rather than calling for policies that makes it easier for them to oppress us.
Buy bitcoin.
Listen closely to boomer. He has inside info directly from Nancy.
Biden just stepped down and Harris is in.
What is that on riches face
Women in charge of security like the secret service or Canadas rcmp and military is an absolute disaster and disgrace. They have no business being in those special roles
OMG
It's true
Incompetence is gender indifferent
@@isabelbozzo6945 they don't. We are not born equal.
I agree, and I'm an amazing woman.
Watch Canada’s productivity go through the roof. Future is so bright 😎
My comment about this week's incident was deleted.
That's disappointing, guys. I avoided all sensitive keywords.
boomer pissed his barber or what
Sask for first! Lol
I'm glad Rich is there to provide a balanced perspective or a soft counter, otherwise, I can see this podcast easily drifting into conspiracy theory rabbit hole and flirting with the fringes.
We should always believe everything the government says
@@signalarity7171I agree, they have our best interests at heart and would never mislead us. They have earned our trust.
@@signalarity7171😂
Fringe minority!!!! 🤪
Shareholder meetings are the largest contributors to conspiracy theories, you would have to be a fringe minority to think anything important is ever discussed and acted on behind closed doors. They clearly use the opportunity to play ping pong or beer pong, crazies.
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she's mostly on Telegrams .....