maplevalue
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Posts posted by maplevalue
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Is the Bottom Almost Here?
Yes.
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1 hour ago, Spooky said:
younger Canadians have more options than ever with the growing prevalence of remote work.
On this note, it is remarkable how quiet the Toronto subway is during regular week rush hours. For many younger Canadians I think the case for living close to the downtown core is really weakening.
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Jack Ma’s Ant Wins Approval for $1.5 Billion Capital Plan
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EPISODE 5 - WILL INDUSTRIAL BIOTECH BE THE NEXT MANUFACTURING REVOLUTION
Industrial biotech companies can already produce synthetic spider silk and plant-based burgers that taste like meat. Future possibilities include timber produced from yeast. In the latest episode of Short Briefings on Long Term Thinking, Kirsty Gibson tells Malcolm Borthwick why she's fascinated by the opportunities of industrial biotech and its enormous investment potential. -
In a year where Russia, one of the largest EMs, becomes completely uninvestable for those in developed markets, I find it a bit surprising that EEM and SPY are basically down the same YTD.
(and yes I know the EEM looks worse if you look at a longer time horizon)
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41 minutes ago, Daphne said:
We did it! 800+!!!
And it had to happen on a day where SPY -2.5%
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1 hour ago, Xerxes said:
Is that related to Bailie investment fund ?
EDIT: actually it is. So you are buying the "manager" of the funds as a business
I basically view it as a better version of ARKK
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5 hours ago, Spekulatius said:
The chart really shows that 3 month worth of data isn't worth much imo. I actually agree that it looks like the worst is over, but we could still have a 5% inflation run rate right now. We cant use monthly data and I think YoY data is the right way to go about this. When you want to control something with a lot of noise, the last thing you want to do is react to every high frequency input.
I am not sure I would agree with your statement that CPI has a lot of 'noise' right now. Instead, the way I look at it is that the underlying trend of inflation has fluctuated quite a lot recently, and there great uncertainty about the path going forward (despite what confident 2023 year ahead pieces would say!).
To me this makes each recent datapoint extremely important as it gives us a better understanding as to what the 'true' inflation level is in an economy emerging from all the disruption of the last few years.
If we get a couple more prints like this the question will become when does the Fed restart QE.
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SMT - Scottish Mortgage Trust
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Was talking to a Political Science professor the other day who said it is now hard to give any take home assignments because the answers ChatGPT can give to his questions would end up with a passing grade :).
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5 hours ago, SharperDingaan said:
Does it really matter?
Assume a 100K investment (CDIC insured at Canada's credit rating).
Yesterday I could buy a 5yr Canada for 3.00%, a 5yr GIC for 5.00%, and current Canadian inflation was 6.9%. If I buy the Canada, I am assuming a negative real return of 3.9% (3.0-6.9). Whereas if I buy the GIC, I am assuming a negative real return of 1.9% (5.0-6.9).
Put another way, the real world (main street), expects inflation to fall 200bp (-1.9-3.9 real) in the near term, and another 190bp (-1.9 real) over the longer term; or Canadian inflation falling to 4.9% in the next few months, and 3.0% over the next year. In relative terms, if that is better than the US/EU; CAD strengthens.
Quite a bit different to what the media/Bay street would like you to believe
SD
The issuers of 5yr GICs are pricing them as a spread to 5yr Canada yields. They have nothing to do with inflation expectations.
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6 hours ago, scorpioncapital said:
if rates go down or stop rising will that weaken the CAD? After all the Yen did weaken massively this year..but it stayed elevated for like 30 years before that.
In a scenario where rates go up, and CAD economy is very sensitive (bc of structure of mortgage debt) and starts to weaken, and the US economy keeps chugging along then you would probably get CAD weakness as the BoC pauses and the Fed keeps going.
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3 hours ago, SharperDingaan said:
Media estimates (strongly manipulated) currently place > 50% of all Canadian outstanding floating rate mortgages at above their trigger rates.; selling both fear and armageddon as the monthly payment is no longer covering the interest cost. However, as/when the current rate falls below the trigger rate again, the mortgage will instantly return to performing status as debt repayments resume.
Everything is fine as long as rates go back down! If we are in a 'new normal' (or more accurately, back to a level of rates that prevailed before the GFC) things could become very interesting.
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The interesting thing about Canada is that essentially all mortgages are floating rate. There are two types of mortgages, variable rate where payments immediately adjust based on what banks' prime rates are, and fixed rate where a rate is locked in for (in most cases) 5 years. So even if Canadians have a 'fixed' mortgage, they are still exposed to higher rates since every 5 years they need to pay a new going rate. Many people have yet to feel the sting of higher rates, but with the passage of time, as more 5 year fixed mortgages get reset at higher rates, the 'pain' in the market should increase. All this is to say, is that if all the BoC did was to keep rates on hold for the foreseeable future, their policy should still lead to indigestion in Canadian housing.
This Twitter thread explains it well.
It's a similar dynamic to the federal debt in Canada where about 1/2 of debt matures in the next 5 years (https://www.bankofcanada.ca/stats/goc/results/en-goc_tbill_bond_os_2022_11_30.html).
Now there are a lot of factors related to what happens with housing, but I think it is safe to say Canada fairly vulnerable to an extended period of high rates.
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2 hours ago, changegonnacome said:
It’s not a target if you keep changing it when the going gets tough……talking about changing it upwards at some point in the future is a worthy debate…….but doing so now is just not the time IMO….show resolve, get back to 2-ish, hold it there for a year or two THEN have the debate ….anyway think about what a 2.5% target rate would do to long duration treasuries…I mean if you want to help stonks go up it just immediately wouldn’t be a good for them as 10/30yr would shift upwards incorporating higher ‘acceptable’ inflation
My "markets does not have on its radar" scenario is some politician comes along and says "let's make the inflation target 0". It's a vote winner IMO. Low probability, but I think the markets assign it a 0 probability.
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Read this again today. Really interesting piece. I noted his view that if there was a productivity boom the stagflation path could be avoided (I often think about the productivity gains we will get from WFH + increasing application of AI across industries...seems like bright days are ahead).
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https://wondercollaborative.org/human-nature-documentary-film/
Terrific, terrific documentary on gene editing. Partially funded by Jim Simons' foundation.
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On a day when media is at fever pitch over instability in China EEM -0.4% vs. SPY -1.60%. Weak hands already taken out by the CCP congress perhaps?
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On 11/27/2022 at 11:49 AM, Spekulatius said:
Just my hunch, if labor market stays reasonably strong and the wage increases continue to trail inflation, we are going to see widespread labor strikes and more unification.
That will complete the 70‘s experience. Maybe even the bellbottom jeans come back as well.
P. S. Perhaps the strikes are already happening in the way of quiet quitting.
In Ontario we recently had the government attempt to bypass collective bargaining and enforce a contract on a education union (union wanted more $$$ citing inflation). The government backed down and eventually negotiated after there was talk of an indefinite general strike from a variety of unions in Ontario (https://labornotes.org/2022/11/general-strike-threat-beats-ontario-anti-worker-law).
Just a taste of the disruption of what can happen when inflation -> real wage decreases.
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9 hours ago, UK said:
The widespread dissent has raised concern that the government may respond with a crackdown to stifle further protests. “I think a crackdown is predictable. I think that will happen,” said Link at the University of California. “The determination that a man like Xi Jinping has to fight back is ironclad. He'll go to the mat.”
Crackdown or not, it increasingly seems like the days of COVID-0 in its most extreme form (i.e. Shanghai lockdowns) is pretty much over. The risk to social stability is probably greater with continuing lockdowns than having uncontrolled spread (think India when it got hit with Delta, it obviously was bad, but the wave was over in a month).
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58 minutes ago, Cigarbutt said:
Ok but how does that change affordability (on a net basis) from the buyer's perspective?
All else equal higher property taxes -> purchase price of investment property would have to be lower to generate same return.
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A combination of low property taxes and high development charges has contributed to high housing prices in Canada, particularly GTA. There is some interesting legislation being tabled where Ontario is going to limit development charges by municipalities. In Markham, a Toronto suburb, there is talk of needing to increase property taxes 50%-80% to cover the hole that will be left from these development charges. Could potentially change the math around investment properties, and help with supply.
https://globalnews.ca/news/9292260/ontario-cities-protest-ford-government-housing-bill/
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i) COVID-0 slowly easing
ii) weak US CPI -> weak USD -> support for EM
iii) noticeable decrease in activity in the COBF China thread
i+ii+iii=the bottom is in?
Fairfax 2023
in Fairfax Financial
Posted
Perhaps FFH converting the TRS into actually buying back the shares?