The 5 Year Yield

September 23, 2023

Let’s start with a scary chart, and then look at an even scarier chart.  Here’s the Canada 5 Year Government Bond Yield, going back to 1995: As you can see, the yield is now at just over 4.2%, the highest level since November 2007. Remember what happened in 2008?  Scary, eh. Let’s zoom in for […]

Read the full article →

Oil: Up or Down

September 16, 2023

Today, we will discuss only one topic: oil. Since the end of June, Oil, as measured by the WTI Crude Oil price, is up 36%, from around $67 to around $91 per barrel. Is Oil going to the moon?  Is this the start of an inflationary cycle? Let me answer that question by presenting two […]

Read the full article →

Inflation will hit zero by Christmas

September 9, 2023

How’s that for a clickbait title? Everyone is worried about inflation.  They say that unemployment remains low, so employers must pay more to retain workers, so wages go up, and that’s inflationary. That was the story in 2021 and 2022, but that’s not the story today. With the reduction of direct fiscal stimulus (CERB and […]

Read the full article →

The Recession Has Started

September 2, 2023

As you all know, the Baltic Dry Index (BDI) is an index of average prices paid for the transport of dry bulk materials across more than 20 routes.  The BDI is often viewed as a leading indicator of economic activity because changes in the index reflect supply and demand for important materials used in manufacturing. […]

Read the full article →

As Expected

August 26, 2023

Last week was as expected.  The Republican debate was as expected (nothing happened). Jerome Powell’s speech at Jackson Hole on Friday was as expected (“The inflation fight is not over; I will raise rates further if needed.”). Also as expected, the end game is near for the “Magnificent Seven” stocks (AAPL, AMZN, MSFT, META, NVDA, […]

Read the full article →

The Yield Curve, Interest Rates, and Bitcoin

August 19, 2023

The Yield Curve The Canadian Yield Curve remains significantly inverted, but the slope has eased, slightly: Here’s the difference between the 2 year and the 10 year yield: July 7, 2023  -1.231% July 14, 2023  -1.289% July 28, 2023  -1.164% August 18, 2023  -1.043% So, as you can see, the curve has shifted to the […]

Read the full article →

Holding Pattern

August 12, 2023

For now, we wait. My best guess is the market may have one more pop up left, but I expect that by the end of the year the market will be much lower.  So, I’m primarily in cash. Here’s what I’m watching: First, unemployment.  Yes, I know the numbers look good, but if you dig […]

Read the full article →

Summertime Charts

August 5, 2023

Let’s review some charts.  First, a long term view of the Canadian Labour Force Participation Rate: As you can see, since peaking in 2003, the trend is down.  Let’s zoom in: As you can see, the trend is accelerating.  The Labour Force participation rate is now 65.6%, which is higher than the 60% level reached […]

Read the full article →

The End Draws Closer

July 29, 2023

Good title, eh?  The End Draws Closer.  The End of What?  What does “Closer” mean?  Are we a day away from whatever the end is?  Or five years? I don’t know. I get up early on Saturday mornings and write down my random thoughts. But let’s start with a chart, shall we?  This is the […]

Read the full article →

Proof that Inflation is Collapsing

July 22, 2023

Last week we discussed the inverted yield curve, which always precedes a recession.  When recessions happen, consumers have less income, so they spend less, which tends to drive down prices. I’m not saying that recessions cause prices to go down.  Correlation and causation are two different words. However, it makes intuitive sense that inflation will […]

Read the full article →