Canadian Stocks and Oil Slides Further

On the plus side, gas prices are cheaper.

On the negative the side the Canadian economy is getting whacked by the slide in oil prices.

It’s been nine straight days of losses in the S&P/TSX, which is down 7.4% in that time.

Analysts at Morgan Stanley projected Brent oil may slump to as low as $20 a barrel on strength in the dollar. Brent dropped 6.7 percent to $31.32 a barrel in London. Bank of America Corp. cut its average 2016 Brent forecast to $46 a barrel from $50.

“Risk appetite will not return until we start to see crude carve out a bottom,” said David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates Inc., in a note to clients.

The S&P/TSX fell 1 percent to 12,319.25 at 4 p.m. in Toronto. The gauge capped a 20 percent plunge from its September 2014 record on Jan. 7, hitting a magnitude in declines commonly defined as a bear market. Canada was the second Group of 7 country to see its benchmark enter a bear market, after Germany’s DAX Index did in August.

Are you selling, buying or staying put?

Read the full article here.

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Bull! Bull! Bull!
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Bull! Bull! Bull!

Stocks! Stocks! Stocks!

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

remember your gains aren’t real until you SELL!

Dave
Member
The dollar just touched a 6 handle. Not good. I think Poloz is a fool for cutting interest rates and taking the dollar down. I don’t think gas is cheap. It should be much less. Oil has fallen by an incredible amount and we’re getting a slight discount on what we normally pay any other Winter. This is not good. With the low dollar, I think we’re likely to see some inflation. Most of our consumer goods are imported and the price to import keeps going up. Try buying an Apple computer this time next year. New iphone? 30% more. New car? Lucky we make some of that here at home so manufacturers can moderate price increases. I think the pieces are starting to get in place for stagflation. Our low dollar is going to create inflation and then our… Read more »
crabman
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crabman
Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

canada always devalues the currency in response to economic difficulties. and the commodities crash most certainly qualifies as an economic difficulty. it’s a standard play from a well worn playbook. any other canadian central banker would do the exact same thing.

Bull! Bull! Bull!
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Bull! Bull! Bull!

@4

paper gains. doesn’t mean anything until you sell.

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

just waiting for people to tell me they’ve been short this whole time.

crabman
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crabman

Funny how Dave wasn’t concerned about house price inflation. It took gas and iPhone inflation to do that. ;^)

Doubtful we’ll see stagflation, we don’t have the conditions for it.

crabman
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crabman

@6, So you have to be all cash before it “means anything”?

bird
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bird

Gas is cheap. I’m getting it for just over $2 a gallon. Of course I moved to the states, when I was last back in Vancouver it took almost 2x the price to fill up my tank – why is that?

I’m glad I moved when I did, but wish I had moved more of my CAD to USD earlier. I guess I’ll just let it sit for now and hope that the exchange rate goes my way in the next 20 years or so.

Shut It Down Already
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Shut It Down Already

7, once the bottom has come in they’ll be predicting further losses as if they’d known the entire time. It’s easy to extrapolate a trend. Doesn’t necessarily result in the correct answer, however.

Best place on meth
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Best place on meth

Who cares about iPhones, people can’t eat those.

Every time I go grocery shopping the prices have gone up from the week before.

I feel bad for low income people who are going to suffer from rapidly rising food prices.

Bull! Bull! Bull!
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Bull! Bull! Bull!

@9

that’s the standard that’s applied to “paper gains” in real estate on this blog, so i see no reason why it would be different for stocks.

Dave
Member

crabman, I’m not suggesting 70’s style stagflation. What I foresee is more of a stagnant economy in Canada similar to the NDP 90’s here in BC. We haven’t had stellar growth since the Great Recession, but that has been offset by low inflation. I think inflation starts to tick up here because of our low dollar and I don’t think that low dollar is going to buy as much economic growth as Poloz thinks. What I think will occur is that consumers get squeezed… a mediocre economy with increasing prices.

Extremely Rich Chinese Home owner
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Extremely Rich Chinese Home owner

Don’t Vancouver Real Estate will upppppppppppppppppppp, forever.

/dev/null
Member
/dev/null

Condos without down payments could be sold by B.C. developer

Because this worked so well last time people tried it…

VanDweller
Member
VanDweller

Slightly off topic.

I’m confused about the trajectory of Canadian 5yr bonds. We’ve touched an all time low as far as I can tell (the 10yr bonds are following the same trajectory). My question is who is buying these bonds? Is it Canadian driven or foreign driven?

Whoever is buying aren’t they loosing big time as a result of forex and difference to US bond yields.

Isn’t this position ripe for arbitrage?

Maybe someone more in the know can offer some sort of explanation.

Fore reference:

Canadian 5yr bonds: http://www.investing.com/rates-bonds/canada-5-year-bond-yield

US 5yr bonds:http://www.investing.com/rates-bonds/u.s.-5-year-bond-yield

crabman
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crabman

14, I agree.

patriotz
Member

@14:”What I foresee is more of a stagnant economy in Canada similar to the NDP 90’s here in BC”

Maybe averaged out over the whole country but the low CAD, low energy cost scenario has been good for Central Canada in the past, and remember it’s tied to the US economy more closely than the West is. Wild card is Toronto RE bust but that won’t affect manufacturing and similar sectors.

patriotz
Member

@3: “their sole focus seems to be the inflation target.”

Not “seems”, inflation targeting is BoC’s sole legal mandate.

Dave
Member
patriotz, I don’t believe that our factories are just sitting there ready to ramp up production in response to more demand from the US. We’ve lost quite a bit of our manufacturing base and we are now higher up in the economic food chain than in the past, at least in manufacturing. I think in general we’re making more specialized industrial goods than ‘whole’ industrial goods. Let’s say you have a microchip plant in Ontario that makes parts for the telecom industry. Your demand will only grow as fast as the underlying demand for the product and company using your parts. Price isn’t really a big factor, other than the initial investment of starting a factory. In contrast, a raw product like lumber will respond quickly to a lower dollar and I expect BC forestry companies to do well. Part… Read more »
Dave
Member

patriotz 20, that’s the case on paper, but not the case in reality. In reality, the BOC is looking at a lot more stuff than just inflation. Just read a Poloz statement or listen to a talk. That’s said, I still think that’s by far the biggest factor in their decision making.

VanRant
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VanRant

Sell everything! 2016 will be a ‘cataclysmic year,’ warns RBS

http://money.cnn.com/2016/01/12/investing/markets-sell-everything-cataclysmic-year-rbs/index.html

And people here thinks their house prices are shooting for the stars

Shut It Down Already
Guest
Shut It Down Already

Right, because banks are so good at calling these things….

Mortgageslave
Member
Mortgageslave

NA markets all closed in the green, china futures are up. US created 30% more jobs than aniticipated in DEC. They are booming! Doom and gloom is overexagerated/overcorrected. I got a tip for y’al. buy some emerging US Small-mid caps, Revenue is local, not affected by high currency or CHINA! That and a few select Canadian Oil companies with good balance sheets that are trading at tangible book value. You can’t get a safer investment than that! Too bad bull,bull,bullshit doesnt’ know what that means. I just wish I had the time that he has to post all day long…So Sad.

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