Juggling Dynamite

As oil flops around near its 2009 recession lows (brown box below), the Canadian dollar has already said “Canada’s worse this time” with a decisive break to a lower low at the end of August (red circle below) and in September still falling, today within a hair of its recent 52 week low.  And indeed compared with Canada’s standing among other OECD countries before the 2008 recession, the economy is in fact worse today on several key metrics. See a few here: Canada’s economic slide (since 2006) in 5 charts.

Most importantly, the commodity supercycle that ran from 2001 to 2008 is now over, and that makes Canada’s financial prospects worse than at any time in the last 15 years.

Revenue is falling and not likely to bounce back soon, just as Canadian households are the most indebted they have ever been and realty prices some of the most over-valued in the world.  All of this underlines the glaring price risk apparent in Canadian REIT (below in navy) and financial shares (purple) as well as the broader TSX (in red) which today remains perilously dependent upon these last two now rightsizing sectors.

On the upside, for those who can see the big picture and minimize downside exposure today, a future of investment opportunity at much lower prices ahead looks bright.  With Canada’s financial strength much worse this time, and the resource-centric Venture exchange (in green above) and the Canadian dollar (in blue) already acknowledging this with a move below their 2009 cycle lows, the obvious question is, does a similar acknowledgement now await the broader market, financials and REITs?

For those with cash, patience and discipline today, the odds have very rarely been as good.

The province of Ontario has launched a new set of traffic laws as part of its ‘Making Ontario Roads Safer Act’ aimed at changing social tolerance for distracted driving.

“If current collision trends continue, fatalities from distracted driving may exceed those from drinking and driving by 2016,” a statement from the Ministry of Transportation said.

At a news conference Tuesday, Transportation Minister Steven Del Duca said he hopes the new law will raise awareness of the dangers of distracted driving.

“Research also tells us that a driver who uses a cellphone while driving is four times more likely to be involved in a crash,” Del Duca said.

“We all know that drinking and driving has become unacceptable in our society, and we need to make sure that the same thing happens with distracted driving.” Here is a direct video link.

City Financial Investment Director Peter Toogood discusses the outlook for the global markets following the worst month for stocks since 2012. Here is a direct video link.

Here is the cash on the sidelines that the stock permabulls keep telling us will be coming in to buy today’s insanely valued markets any moment now.  At 3.2%, mutual fund cash levels hit the lowest levels ever in August, shown here (in blue) since 1984 with the S&P (in black).

And here are the margin loans that have already been borrowed as against security portfolios to buy more insanely overvalued securities as well as art, cars, real estate, trips, living expenses. Yup, this has happened… ‘smart money’ this is not.  See WSJ: Margin calls bite investors, banks.   Forced selling is likely to whack more assets than just stocks this cycle.