No Rate Cuts from The Bank of Canada this Year? - The Loonie Hour Episode 125
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- เผยแพร่เมื่อ 25 พ.ย. 2024
- Tiff Macklem is on deck next week. Bitcoin hits record highs in Canadian dollars. Financial conditions are easing, pushing US equities and inflation higher. Canadian banks report earnings, the mortgage renewal wall is still a very big problem. GDP per capita declines for the sixth straight quarter.
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@40:20 true, but if your rent is lower than the servicing cost on your mortgage, you are ahead of the game, especially if you save or invest the difference.
And repairs, and insurance, and…we’re in a bubble! When the over leveraged landlords can’t pay, the No leveraged landlords who are taking advantage of the bubble will also have to reduce their rates. Everyone is riding the wave but for different reasons.
How do you save when most of your $ is going to rent and cost of living, at least you have an asset to sell with home ownership.
@@Iliinois18 I didn't say "if you can barely afford your rent, you are ahead of the game".
Great video show to hear current thinking by the three amigos.
I grow more convinced that Rich has a sound track of Carolyn Rogers whispering stats and "jawboning" as his sleep melody.
The twinkle in his eye when he says Carolyn Rogers. Dear boy is smitten.
Off topic…I’d be interested in Keith’s and Rich’s perspective on money moving from fund managers to all these ETF’s. I recently listens to David Einhorn on the subject it was interesting.
Thanks for the Good Canadian content.
Since Canada is always worried about adjusting rates due to a lower CAD then perhaps Canada should adopt a 30Y Fixed rate mortgage (same Prime+) so our economy can adjust to rate hikes the same as theirs. Canada constantly plays around the edges every time the US moves and we have a different mortgage scheme.
This would be a great topic for the trio to comment on.
I believe we used to have longer fixed mortgages but the rate is always higher and Canadians chose the smaller rate fixed at a shorter period of time and the banks eventually stopped offering the longer terms
@@DanialDawood I think a 25Y rate is still available, but my point is that since the argument is always how rates impact the CAD then we must compare apples to apples in order to maneuver more easily when it comes to BOC action in relation to the FED and their policy.
If Canada does not do this then the impacts of both fiscal and Central bank movements may have wider impacts on the CAD regardless of how much the BOC tries to protect. A little parity would help with predictability.
@@fillmorehillmore8239 no one even take 10 years fixed. Ppl move and sell
I remember when the rate hikes were creeping up and up and Keith said something along the lines of "Just do it already." I think you called it Keith, incremental increases caused this to drag out for much longer.
"Who tried to kill the Honey-badger?...Everything" Great quote.
Woo hoo! Tiff Macklem on next week!
rate cut coming from old Tiffy
The quality of immigration is falling and it’s showing up in Canada’s productivity growth. This declining number is one that shows the quality of life for Canadians is decreasing. Slow (maybe paused for a few years) careful immigration that allows for infrastructure and other aspects to catch up is the wise path so Canada’s standard of living can rise back up where health and welfare of all Canadians is first and foremost. If we continue the current path of immigration the standard of living here will continue to decline. Too many dependants, not enough contributors to the welfare of our country.
I am an immigrant and I agree 100%. Not only the infrastructure suffers but the whole Canadian society culture of fairness, respect and work ethic. Not to mention CRIME. It took me years to change my mentality and ditch my bad “luggage” from my country or origin. The way it is now, immigration destroys Canada.
Great episode - thanks for the weekly update!
When the job losses happen many will still collect EI for 9 months helping kick the can down the road too. It took us a long time to achieve the valuations we have/had and will take a long time to unwind some of those gains.
You can tell from the tone of the conversation their intuition about whats coming is tarting to kick in
5 % and higher is the historical norm! Why do rates need to come down ?
Because idiots took out too much
As two young professionals, the US is getting more and more enticing.
Salaries for engineers are about 20% higher, and housing is cheaper.
Cross the border and apply for asylum. They'll even cover your medical. Such are times 😂
If you are in stem majors or other professional jobs, then TN visa is an option
@@chandrakanthreddy812 True. I think the tough thing is the long term path to citizenship. I guess a person could always move back to Canada with a bank account full of USD if US citizenship doesn't work out.
@@bradcomis1066 for a Canadian born it is not as tough as other country's citizens. You are right though, if you make enough usd, that goes a long way.
But you have to live in the US
The job numbers are weaker than the headlines suggest. Businesses are cutting back hours and many jobs are part time workers with multiple jobs. Businesses are hoarding labour because of how hard it was to find hires during the pandemic when the labour market was tight. Not sustainable.
I am a bit surprised at how long Canadian consumers have held up, and it must be concerning that the US consumers can hold up much stronger because they don't have a housing bubble consuming as much of their income. This gives US consumers more spending power to buy goods and services to keep inflation up. This puts Canada at the mercy of the US fed and we are in a highly leveraged situation due to holdhold debt.
If Powell is being data dependant, he won't be cutting rates in 2024 as the data will not allow it. By anouncing cuts this early, financial conditions will loosen due to the aggregate demand. (refer to Tiffs failed pause as an example, US consumers are in much better shape than we were in Canada during our pause). So what would warrent cuts in the US?
I love this show, but this episode should have been made atleast a year ago, as this current situation was totally foreseeable. A Recession was always part of the cure, this goes against the mainstream gaslighting that tries to paint high rates as a bad thing.
I just wonder how long it will take the US to go into recession... Their bond auctions are becoming massive and what happens if the US fed has to step in to buy their own junk before inflation is at a 2% target? If that happens, rates will go up in Canada higher than most could ever expect. That would put Canada in really rough shape. The best thing for the future of living standards is to let asset prices tank. Short term pain for long term gain. Sacrifices must be made. Most people have no idea what is coming, that ignorance will make the pain even worse as most will not be prepared.
It's called complacency. The market is far from bottomed.
I got the honey Badger reference, Keith. Honey Badger doesn’t give a fuck just like stonks.
Definitely seeing job applicants for frontline jobs increasing this year
Rate cuts are pure wishful thinking 😂 Even if they do, it won't be for a good reason.
Great information! Thanks for sharing.
Great show, as always guys.
It's not surprising that the GDP per capita numbers sucked. When you import 1M+ "students" working gig jobs and 20 hr/wk min. wage jobs, these folks are way the heck below median output. That's several % of the population that's basically dead weight on the GDP figures.
Even if residents that aren't students are eking out gains, then a bunch of students are going to suppress the GDP per capita figures.
We live in a fake economy
Love the Bush quote haha
Carol Rogers is my favourite too Richard!😊
my amortization is infinite. RBC made my 1.44% 30 year mortgage 6.19% interest only.
Ahahahhahahhaah
@@huskavarnapunkband ahaha yeah it's awesome, I don't even have to pay them back
@31:06 totally agree, most likely case cuz were due fkr a reckoning
Brace yourselves!
"Hey! It's a bubble!" Que theme song....
Feels like 1990s... could this be the start of house price declines for the next decade?
You got it. A decade of slow grinding pain for anyone who has too much mortgage debt
As you may recall, and as I've said from the beginning.... BoC rates must remain elevated into demand destruction/recession and a very painful deleveraging cycle.... against a low rate fueled clearly debasement based DEBT instrument expansion/Real Estate Asset appreciation manifesting across cpi inflation.... and now completely unsustainable by GDI(Incomes) derived from otherwise stagnent GDP 10+ years merely 'papering over' GDP by aforementioned DEBT expansion.
In a nutshell....
our consumer spending reliant GDP is out of Money with no room left for DEBT expansion without debasing the currency.
These guys have no clue covid was a planned trap for housing. This is far from over, just beginning. People have no idea how bad things can get when you are pushed to be a forced seller.
Businesses also got trapped with thr CEBA loans.
Have guys, checked out the latest piece by Andre Coyne of the Globe today. Canada has fallen from 6th richest nation to 15th... as measured by GDP per capita.. and falling fast.... Countries that used to be poorer than us - Ireland, the Netherlands, Austria, Sweden, Iceland, Australia, Germany, Belgium, Finland - are now richer than we are.
One potential reason? Captured in the last paragraph of his piece...
***
Since around 2000, while business investment in residential structures has roughly doubled as a percentage of GDP, investment in machinery and equipment has roughly halved. Could this go some way to explain why our relative productivity growth fell off so sharply after then? Have we been so busy capitalizing on rising housing prices that we neglected to invest in the sorts of things that make it possible to afford a house?
***
We need to squelch this form of RE investment and speculation, so that folks funnel their capital to more productive assets to enhance our productive capacity. We are becoming poorer as a country while we trade real estate and it is getting worse.
It deserves a mention, I think, that a 5% interest rate isn't even that high! This should not be a crushing burden
Exactly.
Housing was built in the 80s with rates 3 or 4 times higher
@@Stormshfterwhat was the cost of a house in the 80s in Vancouver compared to local incomes?
This “it was fine in the 80s” is absolute hogwash. Prices and incomes were way different
@@TimBer-y3y
Not sure about the house prices in Vancouver in the 80s, I grew up in Regina.
I will tell you a story about how bad it was though.
Through the 60s and 70, the people in southern Sask became well known for there love of the Roughriders(football team).
Many farmers had season tickets and 8 times a year a flood of farm families would come to Regina to shop and go to the game, was big for the local economy.
The early 80s were SO BAD!
and everyone was SO BROKE!
That the powers that be in the Roughriders world accepted BAGS OF WHEAT for payment on season tickets. Not in the 1880s
The 1980s
Aren't each cohort of mortgages renewing getting bigger on average (i.e. the average size of mortgage is growing in each renewal cohort)? So won't default rates eventually skyrocket as the cost jumps exceed the income cushion?
The "Saskatchewan" streak is over.... Ha ha. Still an amazing episode!
@34:20 nice bush reference lol
Call it what it is boys. It's Trudeau's policies that have put us here
And on top of all that the Carbon Tax goes up April 1.
Can't they restructure these loans because no one's going to pay back 100 year old loan that balloon this horrible.
Like Canadians invest in housing not stocks. So when it tanks... Their goes Canadian investment. You had a wall Street guy explaining this. US it's all about stock market can't fail. Canada it's our housing market.
True
@@saretsky true like it is possible lol. Nobody talks about that!
It would be good for the upcoming generations to have home prices return back to the historical average of 3-4 times the local incomes. I say this having purchased my first home (and many since) 30 years ago before prices went parabolic. Unbalanced, unhealthy disconnect between local incomes and dwellings stops balanced economic cycles hurting everyone in the end. Dwellings should not be commodified as they are an unproductive asset once built. Better to have normalized pricing of unproductive assets so Canadians can invest in assets that are productive in industries that contribute to the welfare of all Canadians. House price normalization will hurt the greedy but will help our whole nation once psychology around what dwellings are for, changes. To raise our declining standard of living, we need to put money back into industry that produces rather than unproductive assets.
Homes should cost 200k-400k while the average car sells for 60k?
@@KID4271 Yes
@@KID4271 But soon no one will be driving either
@@KID4271what you’re alluding to is that we’re in an “everything bubble”. To overpay for an asset because another asset is inflated isn’t a great wealth strategy in the long run. “Everything bubbles” have occurred many, many times throughout history and eventually end in a repricing of all assets. Bubbles happen and savvy investors know when bubbles are unsustainable and exit before the correction. When the BOC has a stated goal of increased unemployment and when the government(s) in Canada know continued house price increases are negative to political outcomes, these are strong indicators that the peak of the bubble has been reached. Nothing happens quickly until it happens suddenly. Wisdom from studying the past should inform balanced thinking instead of emotional buy in to momentary cultural musings.
The resistance by banks to let their customers default is a real disaster. We have a supply shortage, and perhaps this is because we have constrained supply artificially by stopping people from defaulting. This seems unwise! Face the music and correct the issues.
No expert here, but I think the difference is that US mortgages are not generally held by banks. US mortgage and credit markets are very deep and liquid. They are securitized and held and traded by non-bank investors. The Canadian mortgage market is not really big enough to do the same.
Canadian banks offload many of the mortgages via MBS and covered bonds
I don't think this has anything to do with topics covered in this video but..
So Im in Thailand and I was talking to a guy from Japan. He said 1 yen was worth 4 Thai bhat. That's a crazy low exchange. 1 CAD is 26 baht.
Incorrect….as I was just in Thailand and have planned a trip to Japan the exchange you mentioned is reversed approx 4 yen is 1 Thai baht
There is no arbitrage here or I’d have already taken full advantage
@@stevea3043 hahaha ok. But holy crap do you ever sound like you got a 2x4 up your ass. "Incorrect....." yes perhaps. I can just see who ever you are sticking up your finger and proclaiming "incorrect...." You must be so much fun to travel with.
I Predict BOC won't Cut until April's Carbon taxes starts working into the market. That can take months. BOC will cut if some breaks! I wonder if they do Cut maybe 25 bases points to help Mortgages. Do more meetings and Feather this problem.
If they don't cut this year, our economy is cooked.
If the Government ever stops increase our debt the Economy is cooked too.
Maybe on a short term, like a needed medicine. Otherwise inflation and destroyed currency will have a much worse long term effect. Rather prefer that?
Oh so to clarify BC takes 20% on top of what ever CRa takes. Might as well say flipping isn’t profitable anymore lol. Also there will be less listings cause people will hold onto the place will have to hold onto them. And those perfect flip house opportunities will be selling for less lol. Flipping is not profitable after this. Most likely will come to Ontario . Fuck I was planning on flipping in the winter too cause I’m done holding I’m tired of more tenants and more responsibility . I have enough now
HONEY BADGER: th-cam.com/video/4r7wHMg5Yjg/w-d-xo.html
Came down to the comment section to post the same! Well done.
@24:14 rate cut predictions
I can build my own home. How about some affordable rural acreage on the west coast!?!
38:55.
BOC is hoping the US fed cuts so they can also cut.
Good article in the National Post comparing Pierre Elliot Trudeau’s prime ministership to his son’s today. Very similar. Canada went very blue (including Quebec) right after.
Yet they have a memory compared to fish, very short lived…
You guys are forgetting they know forced sellers are coming. They have set up the nets. Commercial real estate is under collapse right now.
2016 growth started to go down. Isn't that around the time our dictator JT came into office?😢
Honey badger doesn’t give a F**K! It was the honey badger vs snake! Must see!
And the hive of bees
They are waiting for housing to correct.. thats the best outcome
Curious what business, news, information sources the three of you are consuming regularly?
Bloomberg, and lots of good follows on Twitter, independent newsletters
Hey steve, the youtube uploads are always delayed. Any chance you can make sure it is up and going early please?
It's free content. Who are you to dictate when it should be uploaded??
If there is such a housing shortage then end users will buy presale and wait.
keith has 4 years to come up with another great joke lol
cant wait
In Calgary there are bidding wars for real estate so it seem the housing bubble just moves to different cities because we’re ever there is jobs all these new people are moving to consider 225000 houses built per year 1.2 million people coming in yes a lot off them live on the street or in tents but at least 500000 are trying to get a home either rent or buy
We need to get rid of recourse loans
When will I be able to borrow fiat currency against my BTC?
can someone in the comments explain to me the mechanics by which if the BOC cuts rates before the US does, that that will then weaken the CAD against USD?
Yes most likely
I believe it’s due to demand. If BOC cuts, it will make investing in the US more desirable. When things are desirable, the increase in relation to the thing that became less desirable. So CAD decreases because investment shifts away from Canada.
@@brandonvandyk9856 I suppose that makes some sense. Thanks for taking the time to respond!
greater than 35 yr mortgages should be illegal...u can't pay, u lose it
A 1M dollar home today by 2030 will be 1.6m+ in value.
With that what is the smart thing to do for your future..
I'm sure zero percent mortgages and 99 year amortizations can get us there. We can then be the most expensive Country in the World for Real Estate with the most available land.
Are you trying to unload your 1M dollar house?
@@Jo-mf2vu no. Just based off the last 40 years home prices double every 10 years. It could happen again...
@@baseline6786Not accurate. For ten years in the 90's house prices in GTA went down in price. That could happen again.
@@Jo-mf2vu if immigration was weak then sure. But not this time. Maybe in 2030-2034 will see more pull back from a new high though.
You Already Know
You Will Own Nothing And Be happy
Rate cuts commence in June 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.
The financial market is a reliable choice. Diversify your portfolio with I-bonds, stocks (ETFs, REITs, dividend-paying stocks), and bitcoin. Given your budget, I recommend hiring a fiduciary to ensure you receive professional insights for a fee.
It's often true that people underestimate the importance of financial advisors until they feel the negative effects of emotional decision-making. I remember a few summers ago, after a tough divorce, when I needed a boost for my struggling business. I researched and found a licensed advisor who diligently helped grow my reserves despite inflation. Consequently, my reserves increased from $275k to around $750k.
I'm pleased I found this conversation. If you're comfortable with it, could you share how I can get in touch with the advisor you rely on for your investments?
Well, there are a few out there who know what they are doing. I tried a few in the past years, but I’ve been with Margaret Johnson Arndt for the last five years or so, and her returns have been pretty much amazing.
Welcome to the dark side bros #H4L Also kudos to boomer for remembering millenial pop culture better than the millenials on the panel: honey badger don't care, honey badger don't give a sh**!
Cant they lower interest rates temporarily let people lock in their rates ( for 5 years) something like US. And raise rates back up. Wont this fix the issue of inflation, and keep inflation down.
Dumbest idea I've ever read
lmao do you know how much that would shock the system and send bonds and debaunchers all over the place.
I'm gonna smoke a bliffy, then watch the rates lowered by tiffy
Hi. Im looking for people to support Steve getting a large federal govt consultant agreement for him to try to solve Canada's housing issues. Like 10 million bucks for him to hire anyone he wants this year to provide honest advice and recommendations. Please support
Canadian economy is in a recession and inflation seems to be cooling. As we fall further and further behind the US, so will Bank of Canada's policy be behind Fed's in interest rate. Barring an unlikely commondity boom, the loonie may still see another step change down. Canadian housing had already corrected against USD, and crashed against gold, while doing okay priced in loonie. IMHO.
The data in the US has improved but the data in the US is as trustworthy as Chinese data, so….
The borrower is slave to the lender. Im not religious, but there is definitely some wisdom in the bible.
Fix your audio guys, Steve is always 3db less than the others two.
It’s going down for sure 4 time this year another 6 times next year period!
Rate cuts commence in June 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.v
The financial market is a reliable choice. Diversify your portfolio with I-bonds, stocks (ETFs, REITs, dividend-paying stocks), and bitcoin. Given your budget, I recommend hiring a fiduciary to ensure you receive professional insights for a fee.
It's often true that people underestimate the importance of financial advisors until they feel the negative effects of emotional decision-making. I remember a few summers ago, after a tough divorce, when I needed a boost for my struggling business. I researched and found a licensed advisor who diligently helped grow my reserves despite inflation. Consequently, my reserves increased from $275k to around $750k.
I'm pleased I found this conversation. If you're comfortable with it, could you share how I can get in touch with the advisor you rely on for your investments?
My CFA ’Margaret Johnson Arndt’ , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
I just looked her up on the internet and found her webpage with her credentials. I wrote her a outlining my financial objectives and planned a call with her.
He try to find a way to manipulate the market. I do
Not believe him. Rate will cute this year for sure.
House price declines like 1990 what are you smoking there bro😮
Honeybadger don't care 😛
bitcorn
why are you scared to talk about the best asset over the last 15 years...... bitcoin!!!!!!
Best investment in the last 10 years is Toronto real estate. I know one guy who bought a house with 5 percent down and sold it for triple what he paid 5 years later . Turned a 40k down payment into 1M tax free cash.
@@MustyBastard if this guy spent 40k on BTC 10 years ago and did nothing, he would have 10.25M today
@@CrispinTarbuckles no one did that. Look at all people who lost money in that time due to hacks and exchange collapses. There were so many things you needed to navigate over that time period past the point of just holding. Unless you were tech savvy and knew how to use a paper wallet - which most BTC investors probably still don't know how to do. Also seeing your investment going 10000X in that time period, you also had to not get the urge to sell anything. This is a 1 in a million instance you are talking about - not your average crypto investor. I know of one guy that did that and everything the man touched turned to gold - so he had an heir of confidence build by that fact, he ended up deing of cancer at 50 something with 20M in BTC that he bough mostly at $200-$500 range. God knows what it would be worth today
I’m long.
I am decades younger than Keith (a zoomer) and definitely know the honey badger meme from 13 years ago. Somehow the boomer is more in touch with meme culture than the millennials and I am severely disappointed... HONEY BADGER DONT CARE! HONEY BADGER DONT GIVE A SHIT!
@icecapassetmanagementlimit849 I have your back Keith! Only problem is the markets aren't as durable as our invincible mammalian meme and maybe should care a bit more
These guys have got to be pretending not to remember the honey badger, come on now
Trudeau really killed growth after one year 😂
Gi joe
Canada is the serf economy.
I think it is more likely that B T C and E T H will retest resistance up and then fall. However, as always, things change from day to day and all we can do is trade responsibly, monitor the markets and re-evaluate our strategies often. I want to thank Lukas Douglas for being my source of crypto education as I comfortably earn 12.7 B T C.
HE’S MOSTLY ON TELEGRAMS APPS WITH THE BELOW NAME.
@lukasTR
Steve are you going to gloat a bit that youve liked bitcoin for a while now? Where are all those Pierre polievre haters saying he lost everyone money by suggesting bitcoin to stop horrible inflstion? People don't forget....
Steve had die hard Bitcoin dudes on one episode a while back . I find it sus that bitcoins founder is anonymous. My conspiracy is the elite created Bitcoin as another tool to steal from the people. Inside trading on steroids
Maybe I should bring back the laser eyes for all the trolls
Interest rates to 60%
Inflation to 600%
🇻🇪 🇿🇼 🇨🇦
Canadian inflation is about 3% and has been coming down. I don't think you have any idea what you are talking about.
Most people don’t have money to eat never mind to fight for products at the Best Buy such as big screen Sony tv and cause the inflation 😂
Home owners are crying while crypto holders are laughing! The loonie is junk
The housing market has. to. crash. Period. Canada didn't have it in 2007/2008 but it needed to happen, the government has done everything in its power to keep the housing prices as high as it can to not wipe out peoples wealth. But it needs to happen, If housing crashed bringing a million dollar house down to half a million or even less, then the cost of making new houses after the crash would also crash. We need a deflationary time, but to match this we need to invest huge amount of money into energy and oil. Pollution and climate be damned, Climate change doesn't matter if everyone is living on the street and can't afford food and rent.
You guys are always bearish. Doesnt make any sense. When semi like NVDA, AMD and SMCI are ripping higher that too in first year of bull market there is no recession. Writing is on wall. This is a rip roaring bull market. No two ways about it!
Sorry way too much Steve. I’ve listened to 80+ shows it’s getting worse. Np with a bit of housing but we aren’t tuning in for you. Please stop hogging the pod cast.
It's not a scapegoat to put a tax on flipping. When interest rates were low this is what everyone and their uncle was doing. The tax should be 100% to completely stop this practice.
The tax is too late to the party, should of had it in 2016