November 23rd, 2023
Federal Government housing plans, temporary ceasefire in Israel, stunning election upset in the Netherlands, Open AI melodrama, and $200,000 pet rock NFT’s;
Happy Thursday! Let’s dive into it:
The Federal Government is planning on building more homes, faster. Colour us shocked when we look back in five years and see less homes were built, and slower:
TD Bank is forecasting a steeper drop in home prices amid a sudden surge of supply in some real estate markets. We see this as temporary; shortage of housing in Canada combined with large immigration numbers ensure that Real Estate prices in Canada will remain elevated despite short-term corrections:
US home affordability hits another low; but it is still significantly better than in Canada:
A new report by the Federal Government estimates that by 2028, Canada will spend $60 Billion annually in interest expense on federal debt; this is unsustainable.
A couple tragically died at Canada-U.S. border yesterday. Early reports suggested that it might have been a terrorist attack, but it turned out to be a car crash.
The Federal Government estimates that deficit this year will hit $40 Billion. Unsustainable.
A temporary ceasefire has been reached between Hamas and Israel that includes the release of some hostages in exchange for Palestinian prisoners held in Israel. While it is good news that some humanitarian aid will reach ordinary people of Gaza, do not expect a permanent solution to this conflict unless Hamas is destroyed:
Seems like many ordinary Palestinians also recognize this fact:
Following the shocking victory of Javier Milei in Argentina last week, the Dutch voters last night delivered an even bigger shock by handing a stunning victory for Geert Wilders in Dutch election.
Globalization, open borders, multi-culturalism, and many other staples of post-Cold War Western politics are coming to an end at an astonishing rate:
With gold news near all-time-highs, what can we expect next?
Climate change fanatics advocating for slashing oil & gas production to save the “Climate”:
The week was dominated by the firing, hiring by Microsoft, then rehiring at Open AI of the face of AI technology, Sam Altman:
According to some reports, what precipitated the dramatic showdown at Open AI was a technological breakthrough (Q*) that prompted the board to halt it by sacking Salm Altman.
An excellent thread detailing the whirlwind Open AI drama of the past week:
The central banks seem determined to crash the economy to cool inflation. Time will tell if they are right; but none of this will matter unless governments endeavor to return to balanced budgets:
The most powerful man in Crypto, Changpeng “CZ” Zhao, plead guilty to money laundering charges from the US government. CZ will step down as the CEO of Binance – the world’s largest crypto exchange – and Binance will pay a hefty $4.1 Billion fine to settle with the US government.
It is important to see the Binance downfall in the context of the pending Bitcoin ETF approval. If major asset managers such as Blackrock are going to be in the Bitcoin business, they simply can’t have a competitor like CZ sitting in Dubai manipulating crypto asset prices without oversight.
And finally, pet-rock NFT’s are going for $200,000 again. remember 2021? It is all coming back with a vengeance and it might be a good idea to set some money aside to join the fun now instead of when Bitcoin hits $140,000.
November 19, 2023 - Ash Ghanbari
War, equities melt-up, young folks discovering their love for Bin Laden, Carbon Tax, and so much more.
Happy Friday! Let’s dive into it:
CMHC predicts that Canada will be short up to 4 million housing units by 2030, resulting in an 89% surge in home prices. As an investor, keep investing in Real Estate; but perhaps it’s time to completely reimagine what our political class owe our country and start demanding seismic changes in our policies that are driving this disaster.
Canadian household debt levels reach another all-time high. Interest rates better come down or else…
Down in the US, housing starts jumped in October, continuing a trend of 10 straight rises in single-family housing construction. Perhaps demand for housing will continue this trend despite the high mortgage rates, or perhaps this trend will break sometime soon.
Latest polling in Canada shows Conservatives with almost a 100% chance of forming a majority government in the next election. If these numbers don’t change in the next few months, the Liberal caucus will surely force the Prime Minister to step down:
This will surely work:
How many months until the Liberal caucus forces the Prime Minister to scrap this tax altogether?
Down in the US, the Federal Government is walking a tightrope in terms of supporting Israel’s war, and avoiding outright involvement. US Navy however seems to be involved regardless of stated Federal policy.
Never a dull moment in the Middle East. It has been burning for 5000 years, what’s another 2 weeks?
Why have we stopped caring about deficits? what will it take for us to wake up on this issue? Is a Weimar-style currency meltdown the only imaginable end-game that will wake us from this stupor?
I did not see this one coming; Bin Laden’s letter to America is finding a receptive audience among young Westerners. What can go wrong?
You can read the actual vile diatribe here:
Price of Gold is still holding the $1980 USD support level.
All-time high of ~$2070 USD is still within reach. It is important to note that appreciation in the price of Gold could be an early indicator for recessions. Gold has been a flight-to-safety trade for many generations in times of economic and geopolitical uncertainty:
Oil, on the other hand, has been in a downward price cycle for the past 3 weeks. Another early recession indicator? This Goldman Sachs article does a good job of explaining the recent plunge in price:
After a near 14% drawdown in Nasdaq from July highs, and a near 11% drawdown in S&P500, they have both had strong rallies from end of October and are near 2023 highs. It is possible that they break through those highs before end of the year. Just when you thought the bull market had turned into a bear market, the market made fools of both.
Argentina’s Javier Milei was just elected the new President of Argentina. He is anti-Central Bank, anti-stage, pro-bitcoin, and pretty much anti everything else related to statism. It is fascinating to see how a libertarian would tackle Argentina’s chronic inflation and currency debasement; this could have a massive impact on future elections and monetary policy worldwide.
The US Dollar has been on a downward trend since end of October. It is now reaching its 200-day moving average which can act as major support. Not coincidentally, the fall in USD has corresponded with rallies in Nasdaq and S&P500.
The new Bitcoin bull market has commenced. The pending approval of the first spot Bitcoin ETF in the US is one of the major narratives pushing up the price of BTC and the entire crypto market.
In other major new, Blackrock has filed a prospectus for spot Ethereum ETF. Major players are now involved in crypto; it can never go away.
November 15, 2023 - Shannon Newman-Bennett
Capital Direct is proud to be a Diamond Level Corporate Champion of the Cause We Care Holiday Care Package Campaign which will be held on December 4 th at BC Place Stadium. Capital Direct has committed to matching care package sales up to $35,000, doubling the impact of donations to support a total of 400 care packages to single mother-led families across the Lower Mainland.
Along with our support, Cause We Care Foundation will deliver care packages to 1200 single mother-led families this holiday season. For so many families the holidays are a financially challenging time. Capital Direct is pleased to help alleviate the burden on low-income families by partnering with Cause We Care to pack and deliver these essential care packages to neighbourhood houses, transition houses, schools and a variety of other front-line organizations.
The Holiday Care Packages include backpacks filled with warm clothing, $100 grocery gift cards, small gifts and nutritious food items that help to make the season much brighter for vulnerable families. We are pleased that our participation helps to improve the lives of thousands of single mothers and children in the Lower Mainland. To learn more about this campaign and how to get involved visit www.causewecare.org
October 30, 2023 - Ash Ghanbari
Escalating war, treasuries sell-off, Bank of Japan capitulating on Yield-curve control, US tech indexes breaking below their 200-day moving averages, outright housing unaffordability, and….a looming recession?
Happy Monday! Let’s dive into it:
Combine low supply of housing, with currency debasement resulting from deficit spending, and suddenly Real Estate is the best investment to simply hold on to the value of your money. Percent of Investor ownership of new Canadian condos:
Housing supply is an issue, yet builders are sitting on massive amounts of inventory because not enough people can afford them, because the interest rates are too high, because inflation is too high, because our Federal Government has spent like drunken sailors for 8 years, and now no one knows how to actually get out of this 8th circle of hell:
The only people happy about the whole thing? These folks:
Debate surrounding Carbon Tax in Canada is reaching a boiling point, as Scott Moe, The Premier of Saskatchewan threatens to stop collecting it all together unless Prime Minister Trudeau extends the Atlantic Canada exemptions to Saskatchewan as well;
Yes, add the Carbon Tax debacle to the seemingly endless parade of incompetence that can potentially bring down the Liberal Government:
It is a sign of our times that the obvious truth gets drowned out by endless academic jargon that sound too sophisticated to possibly be untrue. “Carbon Tax makes life more expensive” is somehow a controversial thing to admit:
Speaking of a more expensive life and unaffordability, google searches for “Give Car Back” reaches all-time high:
Down in the US, the Federal government has added over $600 billion in debt in the past month alone…and how do they respond? By sending more money overseas.
Add finally, 25% decline in purchasing power in 3 years as a result of reckless money printing:
Theme of the day: spend the money we don’t have, print it out of thin air, and burden the population with taxes we don’t need and inflation to boot.
Price of Gold broke through the $1980 USD/ounce and traded as high as $2006 USD.
All-time high of ~$2070 USD is now within reach. It is important to note that appreciation in the price of Gold could be an early indicator for recessions.
Oil, on the other hand, is flirting with a break below $82 USD a barrel, and revisiting the 200-day moving average. Another early recession indicator?
Last week, both S&P500 and Nasdaq broke below their 200-day moving averages. Ask old-school traders what that means; not great.
Today however, we have had a bit of a melt-up. This is to be expected; the market makes fools of both bulls and bears until no one makes any money trading.
According to Yahoo Finance, “A more than 2% decline across all three major indexes last week brought losses since Aug. 1 to 10% for the S&P 500, 11.5% for the Nasdaq (^IXIC), and 9% for the Dow Jones Industrial Average (^DJI).”
Looking forward to this week, FOMC meeting is scheduled for this Wednesday where the Federal Reserve is expected to hold the rates steady but could potentially cause volatility for the equity markets as the meeting notes always cause traders to adjust expectations into the future, regardless of the immediate rate decision.
Furthermore, Apple’s earnings release are scheduled for this Thursday. Tech investors are jittery from last week’s earnings released by Alphabet and Meta, and on Thursday, Apple’s results can calm the markets or….provide even more jitters.
Biggest news of the day came courtesy of Bank of Japan:
A great explanation of what that might mean for the markets:
Last week, US Treasuries reached levels not seen since the 2007/2008 financial crisis:
Will the Federal Reserve print more money to buy bonds to shore up their value? Can they even do that without risking even more inflation? if not, how will the treasuries recover?
That is the $100 Trillion question. And one that I suspect no one will have an answer to (I am only half-serious. The answer can be found in a barrel of cash being exchanged for a loaf of bread in 1923 Weimar Germany).
We might be witnessing the start of a new Bitcoin bull market. Amongst all the ups and downs and turmoil of global financial markets, one thing seems to take place with regularity: A BTC bull market every 4 years.
Bitcoin is now up more than a 100% in 2023. Last week, it broke through $32,000, an important resistance level that had been unbroken through the year. On the surface, the price action seems to be driven by the pending approval of the first spot Bitcoin ETF in the US; but as I mentioned, Bitcoin seems to have its own cycles that repeat every 4 years regardless of any new developments.
Conflating Bitcoin with Crypto in general is incorrect; Crypto contains a massive amount of fraud via centralized coins that get pumped and dumped with regularity. This is not to say that all coins outside bitcoin are useless; That definitely is not true, but I would wager that as high as 99% of crypto coins are either useless or fraudulent.
And speaking of fraud, the biggest fraudster in the history of Crypto is on trial at the moment:
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