alpha

According to BNN guests/analysts I have listened to today the new rules will have some bite. Kind of hard to believe a family with 100k income is currently able to purchase a 726k home.... whatever happened to the 3x income rule! http://www.bnn.ca/polopoly_fs/1.887271!/fileimage/httpImage/image.JPG_gen/derivatives/default/new-stress-test-rules.JPG http://www.bnn.ca/osfi-sets-new-rules-for-mortgage-lending-1.887025

I don't think any Canadian cities would be considered. There is way to much regulatory overhead to operate it in another country. Plus the uncertainty around NAFTA make it a non-starter. My top guesses would be: Philadelphia, Pittsburgh, Austin, Boston. New York State could offer them a crazy tax package/payout to lure them in, like they did with Solar City.

I don't think Toronto in up 20% y/y. Also from now on you have to pay real good attention and parse the numbers. When numbers don't support the story anymore real estate boards will try to obfuscate the data. Condo prices in the downtown core have jumped significantly over the last few months. Rents for 1 bedroom condos in my building have gone from 1950/month in April to 2400/month now. A 1+1 bedroom unit in my building was just listed for 30% more than it sold for 20 months ago and the real estate agent told me he had 3 requests from buyers to view it the same afternoon he listed it. There have been a number of local news articles about fierce competition and bidding wars over rental units lately. The prices seem incredibly high when compared to local wages but there seems to be no shortage of buyers willing to pay these prices from what I can see.

Bloomberg is reporting a deal is close to being announced for Sempra to buy Oncor for 9.3bn https://www.bloomberg.com//news/articles/2017-08-20/sempra-is-said-to-be-near-agreement-to-acquire-oncor-electric

Berkshires latest filing is out: Eliminated GE Holdings Added to Synchrony Trimmed its airline holdings Increased positions in Bank of New York Mellon and GM Reduced its Wabco Holdings position to almost nothing Increased Liberty Media position, decreased Sirius XM Holdings https://www.reuters.com/article/us-investment-funds-buffett-idUSKCN1AU2B1 https://www.sec.gov/Archives/edgar/data/1067983/000095012317007953/xslForm13F_X01/form13fInfoTable.xml

There was an interesting article in the Financial Times yesterday about the global real estate bubbles being driven by the Chinese. One of the new trends they identified was a surge in smaller Chinese investors pulling their money out of China and investing in cheaper markets like Texas and Thailand, buying up properties for up to 500k. They specifically mentioned Texas was seeing a surge because the real estate was comparatively cheap to the rest of the county.

Since July 2nd FIH.U is up ~15% .... is this being driven by news of the airport deal closing or has there some other news announced recently?

Anyone know why FIH.U spiked 4% today? The only news I have seen recently was the Bangalore Airport deal closing yesterday...

Teranet's latest data shows house prices are still rising: http://www.bnn.ca/canadian-home-prices-rise-in-june-as-toronto-hamilton-lead-teranet-1.802738

JP Morgans former chief equity strategist released a new valuation model for bitcoin. It models bitcoin as a substitute for gold predicting the price rising to 55,000 by 2022. http://www.cnbc.com/2017/07/07/strategist-tom-lee-weighs-sees-bitcoin-going-as-high-as-55000.html

This morning Marc Cohodes announced his latest Canadian short: Exchange Income Fund Corp. He posted his thesis as a series of slides at http://maydayeifdividend.com/ EIF quickly released a press release stating they would release their latest earnings ahead of schedule showing strong performance and consider more aggressive share buy back plan. At one point this morning the stock was down ~10%

New survey out finds 30% of Toronto area households are planning to sell their home in the next 12 months while first time buyers are pulling back. Although it also states 80% of these new sellers are planning to buy another home which may be problematic. I personally know several people in the GTA who have been trying to cash in on the gains in their property value and downsize to something smaller but have been unable to find an affordable new place in the region. Many of these listings could get pulled when they realize their limited options for moving. http://www.bnn.ca/30-of-toronto-households-plan-to-list-homes-amid-government-intervention-survey-1.787064

Patrick Horan was on BNN this morning commenting on the Berkshire deal with HCG and mentioned it could be bad for Canadian banks. He said it could be the first sign of a fierce competitor entering the Canadian market through an area the big 5 have abandoned. http://www.bnn.ca/video/warren-buffett-s-home-capital-bet-bad-for-canadian-banks-money-manager~1152310

Today the BC NDP and Green party announced an agreement to form a minority government. This could put pressure on the Vancouver bubble as both parties campaigned on increasing taxes on foreign money and implementing measures to lower the price of housing. Will be interesting to see if they act on any of their promises.

BRK buys a stake in Lanxess https://www.bloomberg.com//news/articles/2017-05-29/buffett-buys-stake-in-german-specialty-chemicals-maker-lanxess

Toronto real estate developers are advertising in Hong Kong offering to pay the foreign buyers tax on condo purchases and find a tenant for the unit for the first year. http://www.bnn.ca/hong-kong-ad-offers-to-cover-foreign-buyers-tax-for-toronto-condo-investors-1.753423 Also I was reading an article on Bloomberg that mentioned the Chinese government is considering a 10% tax on second property purchases to try and cool the domestic market. If implemented it means Chinese investors following all the rules would only really be paying an additional 5% to get into Canadas best RE markets (Vancouver and Toronto).

Cohodes was on BNN this morning talking about his short on BAD. Stock was down 25%. He said he will be posting more info on his new website: http://turnoutthebadgerdaylight.com , there doesn't seem to be anything posted yet. One thing he mentioned was similar companies were being purchased for 1x sales while BAD was currently trading at 4x sales.

After the recent implementation of foreign buyer tax, and all the headline news about housing shortages in the GTA, the City of Toronto is now a platinum sponsor for an upcoming foreign real estate investor expo. http://marketplacetoronto.com/Sponsors.html

New survey out from Bloomberg, looks like Canadians are still confident real estate will continue to rise: https://www.bloomberg.com/news/articles/2017-04-24/canadian-housing-optimism-hits-record-amid-moves-to-cool-toronto

They just announced a long list of exceptions to the foreign buyer tax e.g. it does not apply to: international students, refugees, people applying for PR, non-citizens employed in Ontario, etc... It seems like these taxes/policies will be easy to avoid. My understanding is that the Chinese "investors" already use a bridgehead strategy where they get Chinese immigrants with full citizenship to act as buyers for pools of investors from china. Using this strategy would already satisfy the new requirements I have seen proposed this morning.

Berkshire Hathaway Home Services announced a partnership with Juwai.com: http://www.bnn.ca/berkshire-hathaway-partners-with-chinese-real-estate-site-juwai-com-1.726283

Chief economist of Gluskin Sheff did an interview today and is now comparing Canada's housing market to USA in 2008. http://www.bnn.ca/toronto-housing-bubble-on-par-with-what-we-had-in-the-states-rosenberg-1.717144 Also head of RBC called for government intervention during their annual meeting today: http://www.bnn.ca/rbc-ceo-sounds-the-alarm-on-housing-urges-governments-to-act-reasonably-quickly-1.716943 I don't understand why the major banks are still writing mortgages in these markets if the CEO's are making public statements about bubbles forming.

Cherry Coke launches in china with Warren Buffett on the label - http://www.cnbc.com/2017/04/03/cherry-coke-launches-in-china-with-cans-featuring-likeness-of-warren-buffett.html

Home Capital fires the CEO: http://www.theglobeandmail.com/report-on-business/home-capital-terminates-chief-executive-martin-reid/article34440301/

http://www.bnn.ca/top-toronto-condo-developer-warns-tax-on-foreign-buyers-could-trigger-recession-1.703067 Brad Lamb (large Toronto condo developer) now claims a foreign buyer tax in Toronto would throw the Canadian economy into a national recession.