Juggling Dynamite

For some reason Huffington Post does not provide embed codes for its videos, so I can’t post them here directly on JD, but they have done a few excellent big picture reports on the history of Canadian home prices. This one focuses on Toronto in particular (although boom-bust cycles play out simultaneously in varying degrees across most of the country).

Canada’s addiction to building houses “a loud alarm bell” https://t.co/icf51gGCs0 via @HuffPostCanada

— Danielle Park (@kdaniellepark) March 31, 2017

They point out that prices have fallen 37% of the time over the past 6 decades (23 of the past 63 years). Boom cycles end with high leverage, indiscriminate buying and rich valuations followed by a bust and years where prices remain lower than the prior cycle peak. This time is likely to be the same.

If we are owning real estate today in Canada, we should be comfortable holding it and paying all the associated costs and upkeep for the next decade. If that will not suit our finances, now is the time to consider any changes needed.

A new report Forecasting Failure: why investors should treat oil company forecasts with caution, looks at the way in which flawed forecasts from oil companies continue to mislead investors on future growth prospects.

Charlie Kronick is the Senior Programme Advisor for Greenpeace in the UK and the Global lead on finance and investment for the oil industry, he has focused for most of the last decade on energy and climate change related issues; and on the risks to capital markets from investment in high carbon infrastructure.  Here is a direct video link to part 1.

Here is part 2.

Here is a slide summary of the report:

Forecasting Failure: Why Investors Should Treat Oil Company Energy Forecasts With Caution from Oil Change International

A good historical overview of the retreat in globalization now sweeping the world can be found in  Whatever Happened to Free Trade?

Globalization is a secular cycle, now in its third mean reversion since the late 1800’s as charted below.

The first expansion cycle lasted 43 years and then spent 37 years in the retracement phase (1913-1950). The second expansion lasted 23 years, followed by 15 years (1973 to 1988) of retracement. The third lasted 20 years from 1988-2008 , before beginning the give back period now in process. Now just 9 years in, we should expect this downcycle in global trade, capital flows and growth to continue for several more years, perhaps a decade or more.  This is all par for the historical course.

Trees can’t grow to the sky, hence we need the downturns to reboot and refresh:  to burst asset bubbles, consolidate debt and reallocate capital from speculation to productive investment and policies.