Toronto Condos pile up on a 21 year high.
"10,368 condos were completed in January 2015 in Toronto
a record 21 year high and 8x the average over the last 10 years."
said Sal Guatieri, BMO Economist
Rent Reduction Time
Condo Glut? Yes. The lower chart shows a snapshot of houses and apartments for rent in the 6 biggest Canadian metros. What vacancy rate does your real estate investment model use?
4 of the last 6 months of Canadian
trade balances have been negative
Big media has been spinning the low CAD as a net positive for Canada. But it's not working out and probably explains in part the sudden decision by the Bank of Canada in cutting its key lending rate another 25 beeps on January 21, 2015, depressing the CAD/USD even further, but:
"There is considerable uncertainty about the speed with which this sequence (increased foreign demand, stronger exports, improved business confidence, investment and employment growth) will evolve and how it will be affected by the drop in oil prices. Canada’s weaker terms of trade will have an adverse impact on incomes and wealth, reducing domestic demand growth." (Bank of Canada)
Export countries want their currency to be valued less than their customer's currency so that they can 1) undersell the competition and 2) try to increase inflation (which increases tax collections). Neither is working. While exports rose 1.5% in December 2014, imports rose 2.3 percent with gains in 8 out of 11 import sectors. The main contributors to the increase in imports were energy products, motor vehicles and parts, as well as metal and non-metallic mineral products. Although Canada is a net energy exporter, its economy measured by GDP is that of producing 30% goods and 70% services (Stas Can Nov 2014).
Global oil demand growth remained at a relatively suppressed 585 kb/d y-o-y in 4Q14. There are several reasons why lower crude oil prices so far seem to have failed to stimulate demand. Those include heightened deflationary risks in both Europe and Japan; adverse revenue impacts on net-oil-exporters; a global trend towards reductions in energy price subsidies and/or increases in oil consumption taxes; and the heavy falls experienced by many currencies, versus the US dollar, negating the impact of lower crude prices in domestic currency terms. Reflecting the downwardly revised macroeconomic backdrop, mid-January saw the World Bank revise down its 2015 global economic growth forecasts to 3.0%, versus 3.4% in June 2014, still an acceleration on 2014 (+2.6%) but notably less-so than previously assumed. (International Energy Agency)
New Record Lows on the Baltic Dry Index Chart
"When inflation expectations are solidly anchored, as is now the case in Canada, there is no reason to fear deflation." said senior Bank of Canada deputy governor Agathe Côté, and yet many analysts are expecting the Bank of Canada to lower its central bank rate again at its next scheduled rate announcement on March 4, 2015. (Canadian Press via CBC News Feb 19, 2015)
Schlesinger defined these to be “self-generating and autonomous”. They begin in the mentality of the masses, rather than creations of influential individuals of a time period. Leaders or politicians are representations of the “mood”, chosen to express the voice of the majority. Shifts in the national mentality are initiated when discontent with present conditions over time drives Americans to pursue a new trend that promises to satisfy the interest of the masses. This discontent, described by Schlesinger as “inextinguishable”, drives the cycles of change in national politics.
Professor Thompson's analysis of long Kondratieff cycles have nearly a thousand years of supporting evidence. If we accept the fact that most winters in Kondratieff cycles last 20 years this would indicate that we are about halfway through the Kondratieff winter that commenced in the year 2000. Thus in all probability we will be moving from a "recession" to a "depression" phase in the cycle about the year 2013 and it should last until approximately 2017-2020.
George Carlin - Why You Are In Debt
"Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement; and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it." George Santayana Vol. I, Reason in Common Sense
"History, real solemn history, I cannot be interested in.... I read it a little as a duty; but it tells me nothing that does not either vex or weary me. The quarrels of popes and kings, with wars and pestilences in every page; the men all so good for nothing, and hardly any women at all - it is very tiresome." Jane Austen spoken by Catherine Morland in 'Northanger Abbey'