Nonetheless, frustration in markets continues to become the focus of concern. Today, The Federal Reserve will raise interest rates as anticipated by 0.25%. The aim is to try and curb the stated 8% annual inflation rate the  American Administration claims to be fact. People on fixed incomes are buying less for more,  utilities are doubling and gas at the pumps is hitting record highs daily. Even releasing strategic reserves only has a maximum (3) day effect on lowering pump prices. In fact, it’s simply failed policies. 

It is convenient to blame the Russia/Ukraine conflict for high gas prices but stopping pipelines from being built and discouraging homegrown production without having a viable alternative is simply failure!  Russia accounts for only 3% of American imports now being acquired from Iran and Venezuela. While China picks up the slack and Russia accepts the Chinese Yuan for payment as does Saudi Arabia for their Oil. The abandonment of the Petrodollar is an act of war in itself. The world standard of the USD used for International payments is to maintain the financial House of Cards from imploding.

Consequently, inflation is running a lot higher than being expressed. Personally, when I look at my own electrical bill it jumped from $100 to $200/month, in Toronto, Canada. The Utility went from issuing the bill bi-monthly to monthly giving the consumer the illusion the cost seemed reasonable. It equates to 100% but who cares as it is only one factor incorporated into the manipulated basket of goods the Government uses to calculate inflation.

Over this Pandemic, Government spending has been out of control with absolutely no regard for managing costs. There hasn’t been proper accountability, transparency or debate over excessive expenditures. It is as if, deficits are part of a scheme to induce inflation by printing money so that eventually the financial system collapses? You may think to yourself, Phil you are crazy, this is a conspiracy theory, that will never happen? Yet, I beg to differ.

Keep in mind, many people entering the real estate market are doing so at escalated market prices. Their ability to qualify is becoming even more difficult based on actual earnings. Relying on returning empties for cash doesn’t constitute income. Some may call it a bubble? In reality, the average debt for those buying a home is approaching the $1mio level if it hasn’t exceeded it already. Low-interest rates allow high debt levels to remain somewhat affordable. As interest rates increase to curb inflation, the effect of these actions may have the following effects:

1) Slowing the real estate market
2) Increasing the cost to the borrower

If the latter compromises a person’s ability to maintain their home and lifestyle, it would be appropriate to re-finance by extracting the equity from the property. Many have avoided disaster, especially in Canada by the continuous bull market. But like all good things, they eventually come to an end.

In the last few years, Canadian big cities’ prices have increased by over 20%/annum due to the lack of inventory. Do you think this is sustainable? Are Canadians immune to an American-type crisis happening like in 2007/2008? The Bankers are being extremely cautious by limiting the amount able to borrow despite the estimated values by qualified appraisers.  It all boils down to how much you earn.

With record prices being fetched, even outhouses are game. The volume of inventory has dramatically increased for those looking to cash in on the bonanza and then take a wait-and-see approach. Unfortunately, in Canada, immigration will be welcoming 1.5 million more people within the next few years and supply can remain tight. The government will need to subsidize rents for these families and they will seek homes. Guess who will pay? Mr. Taxpayer can you lend me a dime?

After some explosive Canadian Jobs numbers last week and the addition of  336.6 jobs in February vs expected (160k), it seems Covid has disappeared? Yet the Global Media focuses on the Ukraine/Russia conflict as a diversion to an issue that could have been avoided. The USD Index pulled back toward the 98.50 level again after booming to the 99.70 range. Oil had hit $127/barrel at the height of the conflict and today it lingers around the $95/barrel level. Presently, the Canadian Dollar trades around the 0.7850 cents interbank level as hostilities and threats of nuclear conflict subside. The focus will shift to the Bank of Canada and their next move is expected in April. All prices indications versus the USD.

I thought this clip below brings some understanding to humanitarian crises in the world explained by a European representative. How does one prioritize them or does the world simply pick and choose one that is most appropriate for taking action?