Juggling Dynamite

Oil and the Canadian dollar are hyped up once more on record speculative long bets. Downside now looms large on the slightest de-escalation in the Middle East amid slowing world demand and a secular increase in global inventories.

Ed Morse, global head of commodities at Citigroup Research, and Bloomberg View columnist Gary Shilling, discuss the outlook for the price of oil amid geopolitical risks. Here is a direct video link.

So far, the US/CAD index is bouncing this morning.  Longer term support remains in the $1.24 per C$ area (green line below) as shown in this chart from my partner Cory Venable.  Fundamental factors suggesting lower for longer loonie, remain in tact.

Interesting comment in this recent segment about US home prices having less downside risk and being more affordable relative to income today than in 2008. That is true in many cities. Not that several ‘hot’ markets are not set up for correction again, but risk is a function of price, so less overvalued this cycle should mean less far to fall than in 2008.  And despite the rebound enabled by rising debt over the past 5 years again, many US markets have still not seen home prices recover their 2006-07 peaks–a decade+ of negative and stagnant prices is typical after secular realty bubbles burst.

Unfortunately, the opposite trends are true of Canada. Here the median price for homes sold in February was $494k (versus a 232K median US home price sold in March) and Canada’s credit bust and decade+ mean reversion in asset valuations is just barely started.

Scott Minerd, who warned clients in a recent note that the market is on a “collision course with disaster,” expects the worst of the damage to start in late 2019 and into 2020.

Along with the decline in equities, a rise in corporate bond defaults is likely as the Federal Reserve raises interest rates and companies struggle to pay off record debt levels.   Here is a direct video link.

Guggenheim’s Scott Minerd’s dire forecast for financial markets from CNBC.

Further to our article on March 16 about the upcoming much-flogged Toronto real estate wealth expo 2018, evidently the event fulfilled all of its promise.  Toronto Life attended to witness the speakers live, see: All the financial advice we got from celebs like Pitbull and Sylvester Stallone at the Toronto real estate wealth expo. There wasn’t much.

When the unscrupulous sell ‘advice’ to the gullible, abuse of trust is the dominant business model.