Juggling Dynamite

This is what the end of a secular bull looks like.  From a high around 3300 in July 2007, the resource-centric Canadian Venture Index (CDNX) has today broken below 500.  As shown below, it is now some 26% below the great recession low reached in December 2008.

With commodity prices still falling, global demand still slowing and defaults in the high yield debt space just getting starting, further industry consolidation is likely. In other words, the once widely adored Venture Exchange may have even further downside yet to come.  And all of this offers a warning shot to broader financial markets.

Why should we care about excessive credit and speculation driving asset prices beyond reason? Because the most reckless participants and advisers attract followers to their ‘genius’ during the topping phase.  In the end, only the few insiders who cashed out early leave enriched.  The vast majority of participants are left with devastating losses in the process–savings and precious time that they could not afford to lose.

The reckless risk-taking and levering in the corporate sector during the past 4 years of QE mania has been ‘ludicrous mode’.

As noted here previously in Ichan warns of markets on a ‘treacherous path’ and Fed and long-always funds pushing capital over a cliff, capital losses have been baked into irrationally high asset prices and indiscriminate buying.  It was always just a matter of time for the tower of terror to unravel. Funds and managers in the space have begun to go bust and the forced selling is spreading to other assets as the need to raise cash via liquidation spreads.  Two words:  not contained.

The opportunity for smart business, greater efficiency, good growth and job creation are enormous.

Elizabeth May is not mincing any words — she says Canada was hated by other countries for sabotaging climate change negotiations at previous talks but things have changed dramatically since the ascension of Justin Trudeau to power.

She spoke about the agreement out of Paris on CBC radio, you can listen to an audio link here.

You can also read May’s summary of the agreement that was actually reached on her blog here.