After the debt-fueled commodity boom: cash flows recede, asset values drop, only the debts remain.
Property prices in WA have fallen while unemployment and cost of living expenses are high. It’s a perfect storm for those who invested at the height of the mining boom.Here is a direct video link.
Canada enjoyed elevated cash flow during the late, great, global commodity boom 2002-2011. That was then. Cash flow is cyclical, and that cycle is over. Unfortunately, Canada is unprepared for the secular mean reversion that follows secular booms. Thanks to over-confidence and malinvestment in highly inefficient assets like the Alberta tar-sands, egregiously priced real estate and non-productive consumer goods, Canada has now earned an extended rough patch in the payback period.
This chart since 2009 of Canada’s largest non-bank mortgage lender Home Capital Inc tells the story. Home Capital shares ballooned with the household debt bubble into 2014 and have since lost 86% on revelations of widespread fraud and management cover ups. This darling of the Canadian housing boom, may well be a canary in the coal mine, reminding of what happens when excess leverage and reckless risk-taking becomes a national obsession.
Dangerously undiversified, the bloated financial sector today makes up 34% of the Canadian TSX Index, while energy and materials make up another 33%. Healthcare is just 0.5% and technology 2.9%.
The chief strategist for Canada at BlackRock Inc., the world’s largest money manager, admits that he doesn’t see a single attractive sector in the Canadian stock market because oil prices will stay low and the rest of our economy is over-levered and floundering. See: World’s biggest fund sees nothing to like in Canada stocks.
We agree. It will take significant price declines across Canadian stocks and many realty markets, before Canadian assets are attractive investments once more. Fortunately for those who are prepared, those opportunities are coming. Unfortunately, most Canadians are oblivious and will not be able to take advantage of better prices when they present.
Remember the adage: “It’s hard to get a person to admit facts when their pay cheque depends on denying it”?
Electric vehicles powered by renewable power makes so much more sense on every measure than old school ‘ICE’, that the evolution is unstoppable. Even oil companies are finally starting to publicly acknowledge these facts with projections that 35-47% of new cars will be EV within 23 years–likely a gross underestimation of the adoption pace now unfolding.
Electric cars are coming fast — and that’s not just the opinion of carmakers anymore. Total SA, one of the world’s biggest oil producers, is now saying EVs may constitute almost a third of new-car sales by the end of the next decade.
The surge in battery powered vehicles will cause demand for oil-based fuels to peak in the 2030s, Total Chief Energy Economist Joel Couse said at Bloomberg New Energy Finance’s conference in New York on Tuesday. EVs will make up 15 percent to 30 percent of new vehicles by 2030, after which fuel “demand will flatten out,” Couse said. “Maybe even decline.” Here is a direct video link.
