Juggling Dynamite

Macro and market pressures that were intensifying over the past year have been compounded and accelerated by Russia’s assault on Ukraine.  While the cyclical downside for asset markets and the economy is higher than average today, the investment opportunity on the other side also promises to be historic.

First, we need to get capital from here to there safely–and that requires defensive positioning, patience, and price discipline.  Sadly, most participants are, once again, set up to lose and not benefit from the mean-reversion cycle.

The discussion below is worthwhile.

Financial system stability, especially in the all-important bond market, was eroding at a concerning pace prior to last week.  But Russia’s recent invasion of Ukraine is serving as an accelerant to the situation…

To give us an understanding of the key risks to monitor, we speak with investor & market analyst Gordon Long who provides a detailed explanation of why disrupting capital and trade flows out of Russia will create a domino effect of instability.  One that, if left unchecked, could possibly trigger a “Lehman moment” for the global financial system.

Yet despite this, Gordon believes the road ahead is filled with opportunity for the savvy investor. Here is a direct video link.

Our February client letter is on the housing bubble casting a pall over Canada’s economic prospects and social stability. The last decade of free money has been anything but. Costs are compounding through reduced household formation, non-replacement birth rates, decreased savings, excessive debt, misallocated capital, and a shortage of investment into longer-term productive sectors, activities and innovation.

For years now, investigative reporter and Wilful Blindness author Sam Cooper has flooded his readers, and all layers of our government, with proof of the money-laundering-inflows helping to make Canadian realty a destructive wild west. The paper trail has been largely ignored. Cooper continued to illuminate this week, see Over $154m tied to detained Chinese-Canadian Oligarch invested in Toronto Real Estate. This is the tiny tip of an iceberg.

As the world hunts to freeze and seize the property of Russian oligarchs, Canada needs to look inward. If the government can shut down the flow of funds to trucker protests, they can certainly curtail large illicit flows. Complexity and platitudes without serious enforcement have to end.

Unaffordable housing prices are no free lunch. Watch why Canadians should care about money laundering in real estate. Here is a direct video link.

Perspective…

With reports that the city of Kyiv was soon to be closed off I decided the best thing to do was to join the crowds and leave for the border before being stuck. Whilst it was a sad to see the people leaving their homes behind and taking their kids and pets with them towards an uncertain future it also showed the best of the people. Spirits were high, nobody panicked, people shared food and drinks with each other. It was humbling to be a part of it.  I have made plenty of films in Ukraine and so I will be making a sizeable donation to help some people there. Here is a direct video link.