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US Stock Valuations Have Reached Extreme Levels: A 95-Year Perspective. In the ongoing debate about US stock market valuations, a striking chart from the Financial Times' Daily Shot presents a compelling visualization of how extraordinary current market conditions are. By examining the ratio of non-financial market capitalization to corporate gross value-added from 1929 to 2024,[...]
The sharp downturn shown in the chart illustrates a K-wave's peak and subsequent downturn, where excessive financialization has led to economic vulnerabilities. This phase could be marked by a correction or a deflationary period where asset prices adjust and economic realities come to the forefront. Understanding this cycle is crucial for forecasting future economic trends[...]
Toronto's housing affordability trends from 1976 to 2024 reflect a sharp and persistent decline in affordability, as seen in the dramatic rise in the price-to-income ratio. Here's a detailed analysis: Long-Term Trend in Housing Affordability The price-to-income ratio (inflation-adjusted) rose from 4.4 in 1976 to 16.0 in 2023, reflecting a 512% increase in real home[...]
1/ Lower rates = bigger market. More folks can afford loans when monthly payments drop. Simple math: same house, lower payment = more potential borrowers. 2/ Quality boost: When rates fall, existing borrowers breathe easier. Their debt payments shrink relative to income. Default risk ⬇️ 3/ The fixed-income goldmine: Banks holding long-duration bonds saw[...]
Key Observations Real Boom (Green Box): This period refers to historically robust population growth driven by organic economic factors. These could include: Natural Population Growth: High birth rates or family sizes. Economic Prosperity: Agricultural or industrial expansions providing stable economic opportunities. Immigration Waves: Large-scale immigration, particularly during Canada's nation-building era in the late 19th[...]
The financial markets are sending clear signals about Canada's economic trajectory. The significant gap between the Bank of Canada's policy rate (3.75%) and the 3-month T-Bill rate (3.43%) isn't just a technical detail - it's revealing a compelling narrative about our economic future. Markets are pricing in cuts between 0.25% to 0.50%, but this anticipated[...]
Devil Take the Hindmost by Edward Chancellor was the first book I picked up about speculation and market euphoria, and it left a lasting impression. The book masterfully outlines the dangers of following the crowd, the perils of unchecked credit bubbles, the risks of leverage, and the folly of overpaying for assets. Chancellor’s deep dive into[...]
Gold In Canadian Dollars with a 24-month ROC! LOG FORMAT (Gold in CAD): The price of gold in Canadian Dollars has shown a long-term uptrend, with recent acceleration to all-time highs. Key inflection points, such as the spikes around 1980, 2011, and the present, indicate strong bullish momentum during these periods. The steep rise reflects[...]
For decades, mortgage credit has been a cornerstone of Canada’s housing market and broader economy. Today, we find ourselves at an inflection point: credit levels have soared to unprecedented heights, yet growth is slowing. What does this mean for Canada’s future housing market and economic stability? Let’s dive into the data and explore the trends[...]
True innovation drives economic growth through several key mechanisms: 1. Productivity Improvements - New technologies and methods allow more output from the same inputs - Examples: Assembly lines, computers, automation systems 2. New Market Creation - Entirely new products/services create additional economic activity - Examples: Smartphones created the app economy, EVs spawning charging networks 3.[...]
Abstract The paper analyzes N. D. Kondratieff's approach to the construction of a general theory of dynamics, presented in his unfinished work ‘Basic Problems of Economic Statics and Dynamics’, written in prison. The approach proposed by Kondratieff is considered in the context of the discussion of this problem in the West, including in connection with[...]
Based on an analysis of primary historical asset bubbles, the average price collapse has been approximately 80%. However, the severity varies significantly depending on the type of asset and market conditions: Most Severe: The Dutch Tulip Mania (1637) saw a nearly complete collapse of 99%, making it the most dramatic bubble burst in recorded history.[...]
Economic growth follows an S-curve, tapering off throughout a LongWave. A fundamental economic reality is often misunderstood: While economies do expand at rates beyond simple arithmetic progression, they don't achieve true geometric growth. Instead, they follow an S-curve pattern - rapid initial growth that gradually decreases as the business cycle matures. The critical issue[...]
Joseph Schumpeter (1883-1950) was an influential Austrian-American economist and political scientist. He is best known for his theories on capitalist development and entrepreneurship. Some key points about Joseph Schumpeter: - He popularized the concept of "creative destruction" - the cyclical process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the[...]
This is where the Economic LongWave, or Kondratieff cycle, and Martin Armstrong's model differ in the following critical ways: 1. Cycle Basis - Kondratieff Cycle (Economic LongWave): This model runs on long-term economic cycles stimulated by technological innovation, capital investment, and debt accumulation. It posits that economies go through foreseeable phases—Spring, which is expansion; Summer,[...]
