The Economic Analyst

Can central banks ruin my thesis by stoking inflationary pressures?

SEPTEMBER 10, 2010

Daily Round-up: Friday, September 10, 2010

SEPTEMBER 10, 2010

Hello again

Dashboard lights…

SEPTEMBER 23, 2010

Have you ever been driving along when all of a sudden a light comes on your dashboard? What do you do? Do you keep driving and just hope it corrects itself with no effort on your part and no ill effect? What if several lights come on simultaneously...and there's someone in your passenger seat telling you to deal with the problem before it blows up in your face?

Roundup: Turkey and Sweet Potato Edition

OCTOBER 10, 2010

Hello all and Happy Thanksgiving! I hope this weekend finds you in the company of those you love. On a day meant for giving thanks for all the blessings we have here in Canada (and we do have much to be thankful for), it seems almost wrong to post anything about the struggling economy and the coming housing bust. Alas, this is a blog dedicated to serving up the straight goods. No extreme doom and gloom...our economy will survive, but not sunshine and lollipops either. So let me highlight a few articles that caught my eye today:

Deflation, gold, and other musings

OCTOBER 16, 2010

Gold hits an all time high while stocks and bonds rally in unison. Market watchers will know that the gold market, the stock markets, and the bond markets all tell different stories. You cannot have them all rise in unison; Something's got to give.

On credit, deflation, housing, and recovery…

OCTOBER 24, 2010

I had a nice discussion with a good friend of mine the other day. She knows my interest in economics and finance, and the discussion wound up making its way back to my main love, the future of the real estate market. It was a bit of an epic discussion. She is a long-time family friend and has 30 years more life experience than I do. As for me, I've read a few things and come to some rather unconventional conclusions. So it was perhaps the classic battle of the wisdom of age vs. the vigour of youth.

More about gold and silver

NOVEMBER 06, 2010

Commodities spanked; USD strengthens; Deflation in core producer prices

NOVEMBER 16, 2010

Commodities taking a bath! Things are starting to make a bit more sense again. Last week I said the following:

Flaherty wrong again; 'Head scratcher' inflation reading

NOVEMBER 23, 2010

Once again Mr. Flaherty has stuck his neck out on what will be recognized as one of his great prognostications: No signs of Canadian housing bubble: Flaherty “The evidence is not there that Canada has a housing bubble. In fact, the evidence with respect to affordability of mortgages in Canada is solid and we have a stable market” Oh?

Inflation, Hyperinflation, Deflation, Stagflation, Screwflation......what's in store for Canada?

DECEMBER 05, 2010

Gazing into the crystal ball... There is still a great deal of debate about what Canada's future monetary landscape will look like. It's should be a topic of interest for everyone as it absolutely determines which asset classes will outperform in real terms over the next few years. Now I don't have a crystal ball, but I will once again share my thoughts on what the future may hold with regards to monetary inflation.

Canadian housing starts rise; More thoughts on the potential bubble in China

DECEMBER 08, 2010

Housing starts rise in November...but are gains sustainable? CMHC today released their preliminary housing starts data for November. After the substantial drop in October's numbers, today's numbers have shown surprising strength. "The seasonally adjusted annual rate of housing starts was 187,200 units in November, according to Canada Mortgage and Housing Corporation (CMHC). This is up from 167,800 units in October."

Canadian bankers fret over mortgage amortization lengths; China moves to quell inflation...will it squash the commodity rally in the process?

DECEMBER 10, 2010

Bankers seeing the light

China inflation comes in higher than expected; Jarislowsky sees the bubble; Bonds continue to get smacked

DECEMBER 10, 2010

China inflation comes in higher than expected In what may well seal the fate of rumored interest rate increase by the PBoC, official inflation rates just released from China show inflation at a 28 month high. It came in at 5.1%, well above the consensus 4.7 percent, and way above the current deposit rate of 2.5%. If the PBoC doesn't act, they risk money fleeing deposits and fueling even larger speculative bubbles.

CPI surprises to the downside; Consumer confidence erodes; End of the bond sell-off?

DECEMBER 21, 2010

Inflation, where is thy sting? In more signs that a Bank of Canada rate hike is likely not in the cards for some time, Canadian CPI readings came in lower than expected for the month of November. You'll recall that October CPI readings registered as the highest in two years. This reading was partly responsible for the violent sell-off in Canadian bonds over the past few weeks as investors fretted about a possible rise in inflationary pressures.

Deflation, austerity, and housing blues in the US; Risks to Canada's growth from the IMF

DECEMBER 22, 2010

Deflation in the US The January 2011 edition of the Bank Credit Analyst has been released (hat tip to DR for the head's up). For copyright reasons I can't link to it, but I will post a few interesting quotes. For more info on BCA Research, check them out here. They are a well-respected economic research firm. This latest issue provides an outlook to 2011. Some key quotes:

China raises rates: More thoughts on the China-Commodity connection

DECEMBER 27, 2010

China raises interest rates Two weeks ago I suggested that a rate hike was all but assured from the People's Bank of China. I expected the rate hike on December 11th. Instead, perhaps out of fear of causing a hard landing in their overheating economy­, the People's Bank stopped at raising reserve requirements at Chinese banks in an attempt to limit the amount of new credit entering the system.

Consumer confidence rises in January; Global food inflation concerns mounting

JANUARY 25, 2011

Consumer confidence rises in January The Conference Board released its January consumer confidence reading yesterday. The index rose 7.1 points to sit at 88.1, still well below the pre-recession average of +-100, but still much better than would be expected.

More on (the lack of) realtor ethics; CPI hit 2.4% in December

JANUARY 25, 2011

Realtor ethics....an oxymoron?

Housing starts flatline; Remax discusses past real estate performance; CREA updates 2011 housing forecast; China raises interest rates

FEBRUARY 08, 2011

Housing starts flatline CMHC released their January 2011 housing starts data today. Seasonally adjusted housing starts were virtually unchanged from December 2010 numbers, but down significantly from both the 12 month average and last January's numbers. From BMO:

Food inflation in China skyrockets; Retailer margin squeeze coming; More thoughts on stock picking

FEBRUARY 14, 2011

Food inflation in China skyrockets Chinese inflation numbers are set to be released tomorrow, with the market expecting a sub-5% reading....lower than anticipated earlier in the year.

The United States' largest export: Inflation

FEBRUARY 16, 2011

Note from Ben: The following post is courtesy of John in Ottawa A couple of days ago, Jesse made the comment that China has been exporting deflation to Canada for years. That’s absolutely correct and life has been easier ever since we became able to buy a dozen tube socks for six dollars. But that’s not the current debate. The current debate, and Jesse’s comment got me thinking about it, is the US exporting inflation to the rest of the world. We have heard that food price inflation is helping to inflame much of the Arab world.

House prices: Examining inflation and supply/demand factors

MARCH 28, 2011

I continue to work with some CREA data to find historic relationships between house prices and other factors. I posted earlier on the historic correlation between house prices and per capita GDP, which shows significant overvaluation on a nation wide basis. Today we'll look quickly at inflation and then at some supply and demand factors.

Inflation tops expectations…is a rate hike all but assured?; Will Canada be ‘going dutch’?

APRIL 19, 2011

Inflation tops expectations Stats Canada released their March inflation readings which surprised significantly to the high side.  While economists were widely expecting a 2.8% year-over-year increase, the actual increase registered at 3.3%, the highest since mid 2008. Perhaps more significantly, the increase was widespread and not largely concentrated in the energy component of the Consumer Price Index.

House prices and inflation

MAY 16, 2011

Examining fundamentals: This will be the last post examining the fundamentals that underpin real estate across Canada.  Later this week, I hope to compile all the data we've examined thus far into a sort of comprehensive overview of the Canadian housing market....an über primer if you will. As a refresher, here is some of the data we've examined thus far:

Chinese economy: The latest assessment

MAY 17, 2011

The following is a guest post from Also Sprach Analyst, an excellent web site devoted primarily to analysis of the Chinese economy.  The site's main author, writing under the pseudonym Zarathustra, is a London School of Economics graduate and former equity research analyst focusing on the Hong Kong and Chinese real esatte markets.  

Carney's conundrum- Rising inflation but stagnant economic growth as domestic demand weakens

JUNE 30, 2011

Forecasting the direction of interest rates in Canada just got more confusing.

Can the Bank of Canada orchestrate a soft landing in housing?

OCTOBER 17, 2011

CREA released their latest resale figures and the Bank of Canada released some rather downbeat business outlook data.  Unfortunately, that will have to wait until tomorrow.  There’s only so much brain juice to go around.  Today, I’ve used my daily ration looking at soft landings in real estate.    Can the Bank of Canada orchestrate a 'soft landing'?