Juggling Dynamite

Jeremy Grantham is the Co-Founder and Long-Term Investment Strategist of GMO, which manages over $60B. Jeremy discusses his background and shares fascinating insights about a broad range of topics including investment bubbles, AI, crypto, reversion to the mean, climate change, population growth and natural resources. Here is a direct video link.

Canadian GDP per capita declined for the 6th consecutive quarter in the final quarter of 2023; this means there are less resources per person–the standard of living is in decline.A new RBC study finds that more than half – one million – of 1.9 million new Canadian households by 2030 will not be able to buy a home if affordability remains close to where it is today. Worst, more than 40% of the new households that can’t buy a home will also not earn enough to afford rent at the market price.

This is not because Canadian incomes are low relative to other nations, it’s because home prices and rents have been allowed to gallop ahead thanks to monetary and fiscal policies aimed at price inflation.

The video below offers a worthwhile overview of the similarities between the Canadian and Australia economies and how the necessary phasing out of fossil fuels will require signficant capital investment and new fiscal and monetary policies for both. We must tax what we want less of and enable what we need more.

Australia 🇦🇺 and Canada 🇨🇦, even though they’re far apart, actually have a lot in common when it comes to their economies. They both rely a lot on selling commodities like minerals and oil, which can be risky. Also, both countries deal with challenges in their housing markets because of immigration 🏠, which drives up prices in big cities. Plus, they’re both trying to figure out how to boost innovation and productivity 🚀. Australia has seen some success with economic reforms that helped its economy grow, while Canada is still figuring out how to deal with its heavy dependence on oil and gas exports ⛽️. In a world full of uncertainty, both nations are working hard to make the most of their economic strengths while tackling their weaknesses. Here is a direct video link.

Danielle was a guest with Jim Goddard on Talk Digital Network talking about recent developments in the world economy and markets. You can listen to an audio clip of the segment here.

After note: This morning, the US March Non-Farm payrolls estimate came in at 303 K, above consensus expectations for 214 K. February was revised down to 270K from 275 K. Household employment increased in March by +523 K vs. +149 K in February. But under the hood, year over year, full-time jobs growth was at a 3-year low, while part-time jobs growth soared to a 2¾-year high. The unemployment rate ticked down to 3.8%, reducing prospects for a June Fed rate cut.

Canada’s unemployment rate jumped to 6.1% in March from 5.8% in February, the highest since October 2021 and sharply above market expectations of 5.9%. That is up 80 basis points from the post-pandemic low of 5.3% in 2022 and 40 basis points above pre-pandemic levels. Layoffs were up 40% year-over-year, and hours worked declined by .3% from February.  This all strengthens the argument for a June BOC rate cut, and Canadian bonds are rising to start the day.

The divergence between the US and Canadian economies is powering the US dollar higher, leaping .66% against the Loonie to 1.3631, the highest since last November. Stocks are rising to start the day. It will be interesting to see how long US equity jubilance can last amid higher for longer US rates.