Juggling Dynamite

World markets are bright red today across the board:  commodities, emerging markets, developed markets, dividend-paying companies, REITs, tech stocks, corporate bonds, cryptocurrencies, pot stocks, most currencies relative to the US dollar, you name it–it’s pretty much all getting shellacked.

The rare exceptions are US Treasuries, Canadian government bonds and the US dollar (as mentioned) which are receiving global inflows and up or little changed on the day.

Note to portfolio owners: days like this offer yet another opportunity to review our holdings.  Check how many securities, funds, and ETFs in your portfolios are selling off altogether today.  That will tell you how drown-proofed your holdings are to the coming bear market. The things that are red today will get a lot redder as this cycle completes.

What’s more, real estate values, business, and employment incomes also tend to be positively correlated with risk markets in debt-exaggerated business and market cycles like the present one.

It is not wise to have our savings plunging along with our real estate and incomes all at once.  Rainy days are coming because they are due.  It’s not too late to move more of your savings into safer more liquid deposits.   It is not about panicking.  It’s about being proactive so that we can take advantage of the next clearance sale in asset markets when capital risk will finally be low and dividend yields high once more.  That is coming.

The latest report from the Intergovernmental Panel on Climate Change emphasizes the need for people to change their lifestyle and consumption patterns in three key areas: eating fewer animal products, transportation, and heating/cooling of our buildings.

If individuals aren’t actively making the changes needed today, we are actively making the problems worse; these are the facts thinking people must internalize. See What the new report on climate change expects from you.  Here is the report’s bottom line on food:

“Eating less meat is one of a number of mitigation strategies suggested by the IPCC to overhaul agricultural and land-use practices, including the protection of forests. The livestock sector is estimated to account for 14.5% of greenhouse gas emissions globally, more than direct emissions from the transport sector.”

The good news is that we know what to do to and can do it so long as we act now as explained by new Nobel Prize winner Paul Romer in his CBC radio interview this week:

Just hours before William Nordhaus and Paul Romer won a Nobel Prize on Monday for their work on the economics of climate change, the UN issued a dire warning about global warming.

…But Romer — whose work focuses on adapting economic theory to take better account of environmental issues and technological progress — says this crisis can easily be averted through economic policy.

The economist from New York University’s Stern School of Business spoke with As It Happens host Carol Off.

Here is a direct audio link  to part of their conversation.

Similar themes and catalysts here with the US in 2006 and Canada today.  As property prices mean revert so goes highly levered economies and financial markets.  Expecting other outcomes is unrealistic.

It’s no secret that Australia is experiencing a downturn in the property market. But for Aussies who own their own home or have a mortgage, there’s worse news. Many believe calling it a downturn is foolishly optimistic – the slump we are in is more like falling off a cliff. On 60 MINUTES, Tom Steinfort speaks with real estate and finance experts who predict property prices could slide by as much as 40 per cent in the next year. And if they’re right and numbers like that eventuate, there’s only one certainty: our entire economy faces catastrophe.

Here is a direct video link.

Here is a link to part 2.

Here is a direct link to part 3.