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There are some cheap investments out there and investors are slowing shifting their money

April 17, 2015

Chris and Rick join Cory to chat about where investors who are worried about the markets are putting their money. The shift is only slowly happening right now but it does outline some undervalued potential investments.

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Discussion
23 Comments
    Apr 17, 2015 17:22 AM

    http://business.financialpost.com/news/economy/canadian-dollar-spikes-as-inflation-retail-sales-pick-up-speed

    Now this is what I expected to start happening. Inflation is the simple solution to the debt and money printing and I am cool with that as my gov. pension will benefit, all me real estate investment will benefit and my gold and silver will benefit. Unleash inflation baby.

      Apr 17, 2015 17:40 AM

      And of course it will also have a cooling effect on real estate. That’s one of the impacts consumers should be anticipating. My feeling is that inflation will overshoot the 2% goal once it gets underway. But since it amounts to a tax on discretionary spending it mean homeowners will feel the pinch. And especially in the cities with the loftiest of home prices and the highest monthly carry costs.

      Now, if you assume energy prices will return to the 70 or 80 dollar mark by next year and also assuming a rate hike or two will come into play by the Bank of Canada then we are starting to talk percentages that will make a difference in aggregate numbers.

      I happen to think inflation is going to make a comeback. But also that it will have a deflationary impact on assets like homes.

        Apr 17, 2015 17:51 AM

        Rate hike. Not a chance. BoC just reduced rates and because of inflation and household debt levels we may not see a meaningful rate hike in my lifetime. One the biggest drivers for inflation will be utilities. Water and power specifical. BC Hydro implemented a rate increase of 23.5% over five years. Water rates are sky rocketing everywhere. Those types of hikes impact inflation in a big way. Local, provincial and fed tax increases (effect everybody in a big way). Rate hikes will come if inflation ever results in significant household debt reductions however this will only happen if gov. can effectively reduce lending which they have tried and failed to do.

          Apr 17, 2015 17:01 AM

          I didn’t know about those BC Hydro rate increases. Wow, pretty steep Peter. So is that one of the ways the Provincial Government is trying to keep the deficit in check?

          Anyway, about rate hikes……….all I can say to you is that the BOC is pretty much tied at the waist to Federal Reserve policy. If the Fed hikes then Canada will follow or risk creating a carry trade differential and draining capital out of the economy.

          Look what has happened the past years since the Global Financial Crisis. BoC rates never never went more than a percentage point above the Fed Funds Rate even during what looked like a housing bubble.

          The difficulty for policy setting in Canada is that the US is its largest trading partner and so there is a tendency to maintain balance between the two nations as much as possible with creating distortions that might upset the Americans….you know, Free Trade and all that Jazz.

            Apr 17, 2015 17:02 AM

            With should have been “without”.

            Apr 17, 2015 17:08 AM

            I think the connection between Canada and U.S. is becoming less significant each year with India and China on the scene. I don’t think anyone wants to go down with the sinking ship that is the United States of America and Europe. There could be increasing divergence there in the coming years. In saying that there will always be strong link. The major government driven inflationary increases in Canada that I could reference are length and include Extended Producer Responsibility (think producer funded recycling programs), major minimum wage increases etc.

            Apr 17, 2015 17:40 AM

            But consider this thought for a second, Peter……what if the US dollar really did go supernova and implode under the weight of all that unrepayable debt? You might suspect that would hurt Canadians. After all, Canada and the US still rep[resent the single largest cross border trading bloc in the world. So then what happens if the dollar loses 40 or 50% of its buying power due to a crisis? I think you will conclude that our Canadian exporters would be eviscerated and beaten into extinction almost overnight if similar currency, inflation and interest rate changes were not countered with mirroring outcomes. That’s what I mean. Canada’s fate is going to be very similar to the US even if the government runs balanced budgets and does not invest heavily in the military and overseas excursions. We should all be careful what we wish for hoping gold will rise against a plummeting US dollar.

    Apr 17, 2015 17:29 AM

    Oil price increase will trigger the inflation boom.

      Apr 17, 2015 17:44 AM

      Yes. And just wait until corn starts to head back up too along with a host of resources and inputs. If we are really at the bottom of the commodity cycle now (and I think we are), then there will be noticeable cost pressures coming over the next few years for Canadians.

      Like they always say, the changes come at the margin. Before you know it you have wage pressures cropping up. So much for the depression 2.0

      Apr 17, 2015 17:36 PM

      That is very possible Peter R. It is the king of commodities for a reason.

      Yes Birdman, soft commodity increases are going to start creeping up, and that is when people finally take notice of inflation…..when it hits their bellies.

    LPG
    Apr 17, 2015 17:31 AM

    On the tax topic, here’s something…

    Chart In Focus, by Tom McClellan
    “US Taxes Returning to Economy-Killing Level”

    http://www.mcoscillator.com/learning_center/weekly_chart/us_taxes_returning_to_economy-killing_level/

    Best to all, and GL investing/trading.

    LPG

    Apr 17, 2015 17:41 AM

    Rick keeps talking about deflation but why cant I see it. Even with the knees cut from oil CPI and Inflation keeps increasing in North America and inflation is booming in many other parts of world.

      Apr 17, 2015 17:52 AM

      He is talking about when the asset bubbles burst and houses go back down in price, stock markets implode and the bond bubble bursts followed by a sharp increase in unemployment.

      The kind of stuff we all pretty much expect to happen one fine day.

        Apr 17, 2015 17:14 AM

        The main reason I do not see deflation coming into effect is because the Fed and big banking will not have it. Of course it will and is occurring on local scales but widespread, I don’t think so.

        Jay
        Apr 17, 2015 17:21 AM

        Except that will never ever happen (re housing). Inflation deflation is specifically $ and $ velocity. Stocks could go to zero but the money supply will only continue to move to infinity. As soon as the housing market starts to go again look for multiple trillions being put into the system. There will never ever be any sustained deflation only temporary clasped followed by inflation /stagflation

          Apr 17, 2015 17:24 AM

          Totally agree. Rick has been talking about deflation for a while and I just don’t get it. Where are the real indicators because in my limited world and I travel a fair bit to U.S.A. I am not seeing it.

          Jay
          Apr 17, 2015 17:25 AM

          If Rick would change his terminology and say collapse in wealth that would certainly be an agreeable statement, but ACTUAL deflation will never come about while these fiat systems are still in tact imho

    Apr 17, 2015 17:27 AM

    I like Rick’s, often different and correct, perspective on things. Maybe do a segment with him specifically related to his views on how this deflationary environment will develop and how that will translate into the bills we pay and things we buy. I need to hear the details because if he convinces me then it may have some impact on how and what I am investing in.

      Apr 17, 2015 17:47 AM

      That’s Ricks favourite topic. He has talked about it extensively in the past. Here is a link you can check out with dozens of Kerr Report interviews on exactly that subject.

      Results for Rick Ackerman and deflation
      http://www.kereport.com/?s=Ackerman+deflation

        Apr 17, 2015 17:48 AM

        Sorry if its slow to load. That’s Al’s server taking its time doing the search.

          Apr 17, 2015 17:02 AM

          I listened to the May 30, 2014 interview and Rick fails to provide real examples of deflation and instead uses phrases such as “deflationary juggernaut – derivatives”, “financial forces of deflation”. The only real examples he uses are inflationary pressures such as food, tuition, health care. Again, Rick needs to break down his vision to real terms and stop talking macro because he has not translated his macro view into real micro terms. All real micro metrics point against Rick.

    bb
    Apr 17, 2015 17:33 AM

    Martin Armstrong feels inflation has nothing to do with gold rising in price.

    On gold, Armstrong says, “Gold rises when people lose confidence in government. It has nothing to do with inflation. So, when you start to worry about government is not going to survive or who’s going to win, that’s when gold rises. Short term, we still have the risk of it going under $1,000 per ounce. It’s going to flip when everything is right. It will probably max out at $5,000 per ounce. . . . You are really talking about a major reset coming. 300 years ago, that was the revolutions against monarchy. Today, it’s going to be revolution against . . . pretend democracy. We do not have a democracy.”

      Apr 17, 2015 17:39 PM

      bb. Good post from Martin Armstrong. I agree that Gold rises when people lose confidence, and small inflation is fine and normal, but when inflation gets ahead of itself and runs up too quickly, then Gold also gets a safe haven bid in those times. I guess you could say that people are losing confidence in that scenario as well.